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Intermediation and Competition in Search Markets: An Empirical Case Study

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  • Tobias Salz

Abstract

Intermediaries in decentralized markets can affect buyer welfare both directly, by reducing expenses for buyers with high search cost, and indirectly, through a search externality that affects the prices paid by buyers who do not use intermediaries. I investigate the magnitude of these effects in New York City’s trade-waste market, where buyers can search either by themselves or through a waste broker. Combining elements from the empirical search and procurement auction literatures, I construct and estimate a model for a decentralized market. Results from the model show that intermediaries improve welfare and benefit buyers in both the broker and the search markets.

Suggested Citation

  • Tobias Salz, 2022. "Intermediation and Competition in Search Markets: An Empirical Case Study," Journal of Political Economy, University of Chicago Press, vol. 130(2), pages 310-345.
    • Handle: RePEc:ucp:jpolec:doi:10.1086/717349
    DOI: 10.1086/717349
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    Cited by:

    1. Jason Allen & Robert Clark & Jean-François Houde & Shaoteng Li & Anna V. Trubnikova, 2023. "The Role of Intermediaries in Selection Markets: Evidence form Mortgage Lending," NBER Working Papers 31989, National Bureau of Economic Research, Inc.
    2. Myśliwski, Mateusz & Rostom, May, 2022. "Value of information, search, and competition in the UK mortgage market," Bank of England working papers 967, Bank of England.
    3. Qiyuan Wang, 2024. "For-Sale-by-Owner Platforms and Intermediation Pricing: Evidence from a Natural Experiment," Marketing Science, INFORMS, vol. 43(2), pages 346-359, March.
    4. Manolis Galenianos & Alessandro Gavazza, 2022. "Regulatory Interventions in Consumer Financial Markets: The Case of Credit Cards," Journal of the European Economic Association, European Economic Association, vol. 20(5), pages 1897-1932.
    5. Ho, Phuong, 2022. "The Costs and Environmental Justice Concerns of NIMBY in Solid Waste Disposal," SocArXiv v8wfg, Center for Open Science.
    6. Kong, Yunmi, 2022. "Identification of English auctions when losing entrants are not observed," International Journal of Industrial Organization, Elsevier, vol. 85(C).

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