Middlemen in Search Equilibrium
This paper shows how including divisibility of goods and productive heterogeneity leads to the emergence of middlemen in an equilibrium search environment. In the baseline model, middlemen are welfare reducing and their number increases as market frictions are reduced. When the model is extended to allow for time taken in production and increasing returns-to-scale in the market meeting technology, middlemen can be beneficial to society by speeding up the meeting process.
|Date of creation:||2004|
|Date of revision:|
|Contact details of provider:|| Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.|
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|Order Information:|| Postal: Department of Economics, BA 110 University at Albany State University of New York Albany, NY 12222 U.S.A.|
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- Kiyotaki, Nobuhiro & Wright, Randall, 1989. "On Money as a Medium of Exchange," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 927-54, August.
- Dale Mortensen, 1984.
"Job Search and Labor Market Analysis,"
594, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Alok Johri & John Leach, 2002.
"Middlemen and the Allocation of Heterogeneous Goods,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(2), pages 347-362, May.
- Alok Johri & Lohn Leach, 2000. "Middlemen and the Allocation of Heterogeneous Goods," Department of Economics Working Papers 2000-06, McMaster University.
- Eric Smith, 2004. "Intermediated Search," Economica, London School of Economics and Political Science, vol. 71(284), pages 619-636, November.
- P. Diamond, 1980.
"Aggregate Demand Management in Search Equilibrium,"
268, Massachusetts Institute of Technology (MIT), Department of Economics.
- Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
- Arthur J. Hosios, 1990. "On The Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Oxford University Press, vol. 57(2), pages 279-298.
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