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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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    5. Arnold, Michael A, 2000. "Costly Search, Capacity Constraints, and Bertrand Equilibrium Price Dispersion," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 117-131, February.
    6. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-969, July.
    7. Reinganum, Jennifer F, 1979. "A Simple Model of Equilibrium Price Dispersion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 851-858, August.
    8. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    9. Rafael Rob, 1985. "Equilibrium Price Distributions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 52(3), pages 487-504.
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    11. Gerard R. Butters, 1977. "Equilibrium Distributions of Sales and Advertising Prices," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 44(3), pages 465-491.
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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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