Middlemen: the good, the bad, and the ugly.
Abstract: We examine the role of a middleman as an expert in markets. A seller's effort determines the quality of the good. Buyers observe neither the seller's effort nor the good's quality. A middleman, after observing a signal about the good's quality, decides whether to purchase it and then to se...
| Publicado en: | RAND Journal of Economics (Wiley-Blackwell) Vol. 49; no. 1; pp. 3 - 23 |
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| Autores principales: | , |
| Formato: | Artículo |
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Wiley-Blackwell
Spring2018
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| Materias: | |
| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Abstract: We examine the role of a middleman as an expert in markets. A seller's effort determines the quality of the good. Buyers observe neither the seller's effort nor the good's quality. A middleman, after observing a signal about the good's quality, decides whether to purchase it and then to sell it. We show that the presence of a middleman may either reduce or exacerbate the seller's moral hazard problem. We also consider a model with multiple middlemen. We find that the seller's effort is minimized if either the middleman's signal is perfect or the number of middlemen is large. |
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