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Search Intermediaries

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  • Xianwen Shi
  • Aloysius Siow

Abstract

In frictional matching markets with heterogeneous buyers and sellers, sellers incur discrete showing costs to show goods to buyers who incur discrete inspection costs to assess the suitability of the goods on offer. This paper studies how brokers can help reduce these costs by managing the level and mix of goods in their inventory. We find that intermediaries emerge and improve social welfare when there is sufficient heterogeneity in the types of goods and preferences. Our analysis highlights how learning and inventory management enable search intermediaries to internalize information externalities generated in unintermediated private search.

Suggested Citation

  • Xianwen Shi & Aloysius Siow, 2011. "Search Intermediaries," Working Papers tecipa-426, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-426
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    References listed on IDEAS

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    1. Bloch, Francis & Ryder, Harl, 2000. "Two-Sided Search, Marriages, and Matchmakers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 93-115, February.
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    7. Yavas, Abdullah, 1992. "Marketmakers versus matchmakers," Journal of Financial Intermediation, Elsevier, vol. 2(1), pages 33-58, March.
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    9. Asher Wolinsky, 1983. "Retail Trade Concentration Due to Consumers' Imperfect Information," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 275-282, Spring.
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    11. Edward A. Baryla & Leonard V. Zumpano, 1995. "Buyer Search Duration in the Residential Real Estate Market: The Role of the Real Estate Agent," Journal of Real Estate Research, American Real Estate Society, vol. 10(1), pages 1-14.
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    13. James Albrecht & Axel Anderson & Eric Smith & Susan Vroman, 2007. "Opportunistic Matching In The Housing Market," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(2), pages 641-664, May.
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    Cited by:

    1. Dasgupta, Kunal & Mondria, Jordi, 2018. "Quality uncertainty and intermediation in international trade," European Economic Review, Elsevier, vol. 104(C), pages 68-91.
    2. Bar-Isaac, Heski & Gavazza, Alessandro, 2015. "Brokers’ contractual arrangements in the Manhattan residential rental market," Journal of Urban Economics, Elsevier, vol. 86(C), pages 73-82.

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    More about this item

    Keywords

    Search; Intermediation; Brokers; Housing Markets;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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