Intermediation and Competition in Search Markets: An Empirical Case Study

80 Pages Posted: 17 Aug 2020 Last revised: 10 Mar 2023

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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.

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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