Intermediation and Competition in Search Markets: An Empirical Case Study

80 Pages Posted: 17 Aug 2020

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Date Written: August 2020

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 that do not use intermediaries. I investigate the magnitude of these effects in New York City’s trade-waste market, where buyers can either search 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.

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Suggested Citation

Salz, Tobias, Intermediation and Competition in Search Markets: An Empirical Case Study (August 2020). NBER Working Paper No. w27700, Available at SSRN: https://ssrn.com/abstract=3675252

Tobias Salz (Contact Author)

MIT ( email )

50 Memorial Dr
Cambridge, MA 02142
United States

HOME PAGE: http://https://economics.mit.edu/faculty/tsalz

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