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Competition between Intermediated and Direct Trade and the Timing of Disintermediation

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  • Fingleton, John

Abstract

This paper analyzes how intermediation by a middleman who buys from sellers and sells to buyers is affected if direct trade between buyers and sellers becomes possible. Without coordination among sellers and buyers, disintermediation may not occur when it would be welfare-improving. With such coordination, disintermediation may occur too early. If direct trade is active, the supply and demand for intermediation become interdependent: an increase in the bid price thus increases both supply and demand. This process of interdependence by which the two trade mechanisms compete for trade is a feature of competing markets generally. Copyright 1997 by Royal Economic Society.

Suggested Citation

  • Fingleton, John, 1997. "Competition between Intermediated and Direct Trade and the Timing of Disintermediation," Oxford Economic Papers, Oxford University Press, vol. 49(4), pages 543-556, October.
    • Handle: RePEc:oup:oxecpp:v:49:y:1997:i:4:p:543-56
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    Cited by:

    1. Klaus Kultti & Tuomas Takalo & Oskari Vähämaa, 2021. "Intermediation in a directed search model," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 456-471, May.
    2. von Walter, Benedikt & Hess, Thomas, 2005. "Content-Intermediation: Konzept und Anwendungsgebiet," Working Papers 5/2005, University of Munich, Munich School of Management, Institute for Information Systems and New Media.
    3. Kambayashi, Ryo, 2013. "The Role of Public Employment Services in a Developing Country: The Case of Japan in the Twentieth Century," PRIMCED Discussion Paper Series 40, Institute of Economic Research, Hitotsubashi University.
    4. Chen, Shieh-Liang & Liang, Hao-An, 2014. "Cause mapping of simple and complex marketing strategies," Journal of Business Research, Elsevier, vol. 67(1), pages 2867-2876.
    5. repec:zbw:bofrdp:2018_020 is not listed on IDEAS
    6. Klaus Kultti & Tuomas Takalo & Oskari Vähämaa, 2021. "Intermediation in a directed search model," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 30(2), pages 456-471, May.

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