Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/130671
Authors: 
Nosal, Ed
Wong, Yuet-Yee
Wright, Randall
Year of Publication: 
2014
Series/Report no.: 
Working Paper, Federal Reserve Bank of Chicago 2014-18
Abstract: 
This paper generalizes Rubinstein and Wolinsky's model of middlemen (intermediation) by incorporating production and search costs, plus more general matching and bargaining. This allows us to study many new issues, including entry, efficiency and dynamics. In the benchmark model, equilibrium exists uniquely, and involves production and intermediation for some parameters but not others. Sometimes intermediation is essential: the market operates iff middlemen are active. If bargaining powers are set correctly equilibrium is efficient; if not there can be too much or too little economic activity. This is novel, compared to the original Rubinstein-Wolinsky model, where equilibrium is always efficient.
Subjects: 
Middlemen
Intermediation
Search
Bargaining
Entry
JEL: 
G24
D83
Document Type: 
Working Paper

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