Journal of Political Economy Vol. 130 No. 2 2022
Intermediation and Competition in Search Markets: An Empirical Case Study
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.
- DOI
- 10.1086/717349
- Volume
- 130
- Issue
- 2
- Pages
- 310-345
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref