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Brokers and the Equilibrium Price Function

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  • Michael Sattinger

Abstract

This paper describes the equilibrium price function generated by brokers in a market in which heterogeneous buyers meet heterogeneous sellers through a matching process with frictions. The equilibrium price function relates the price to alternative ratios of buyers and sellers offered by different brokers. The paper shows how brokers can enter a matching market and charge fees that yield a profit while making both buyers and sellers better off. Computational methods for deriving the equilibrium price function are developed and the solution is related to the market for access to tradin partners.

Suggested Citation

  • Michael Sattinger, 2003. "Brokers and the Equilibrium Price Function," Discussion Papers 03-11, University at Albany, SUNY, Department of Economics.
    • Handle: RePEc:nya:albaec:03-11
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    File URL: http://www.albany.edu/~ms339/PriceDispersion.pdf
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    References listed on IDEAS

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    1. Michael Sattinger, 1991. "Consistent Wage Offer and Reservation Wage Distributions," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 106(1), pages 277-288.
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    Cited by:

    1. Watanabe Makoto, 2020. "Middlemen: A Directed Search Equilibrium Approach," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(2), pages 1-37, June.

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