Centre for Decision Research and Experimental Economics

CeDEx Seminar - Klaus Ritzberger (Royal Holloway)

A40 Sir Clive Granger
Wednesday 21st March 2018 (14:00-15:00)

Intermediation with price competition

Intermediaries can invest into a technology that allows them to squeeze in between buyers and sellers. Yet, whether or not this investment succeeds is random and only observable upon the arrival of at least one side of the market (supply or demand). In fact, when setting prices intermediaries do not know which side of the market will arrive first or whether both sides will arrive simultaneously. There are parameter constellations where intermediation still results in the competitive allocation. For other parameters we find mixed equilibria, implying excess volatility of price, as well as monopolistic equilibria where one intermediary corners the market. Hence, that intermediaries have to act strategically both on the input and on the output side makes these markets fragile and volatile.


Centre for Decision Research and Experimental Economics

Sir Clive Granger Building
University of Nottingham
University Park
Nottingham, NG7 2RD

telephone: +44 (0)115 951 4763
Enquiries: suzanne.robey@nottingham.ac.uk
Experiments: cedex@nottingham.ac.uk