Middlemen versus Market Makers: A Theory of Competitive Exchange
构建模型，研究商品或资产交易中，中间商与做市商两种中介的竞争如何内生决定市场微观结构，并分析做市商进入对交易者福利的影响。
We present a model in which the microstructure of trade in a commodity or asset is endogenously determined. Producers and consumers of a commodity (or buyers and sellers of an asset) who wish to trade can choose between two competing types of intermediaries: "middlemen" (dealer/brokers) and "market makers" (specialists). Market makers post publicly observable bid and ask prices, whereas the prices quoted by different middlemen are private information that can only be obtained through a costly search process. We consider an initial equilibrium where there are no market makers but there is free entry of middlemen with heterogeneous transactions costs. We characterize conditions under which entry of a single market maker can be profitable even though it is common knowledge that all surviving middlemen will undercut the market maker's publicly posted bid and ask prices in the postentry equilibrium. The market maker's entry induces the surviving middlemen to reduce their bid-ask spreads, and as a result, all producers and consumers who choose to participate in the market enjoy a strict increase in their expected gains from trade. We show that strict Pareto improvements occur even in cases where the market maker's entry drives all middlemen out of business, monopolizing the intermediation of trade in the market. When there is free entry into market making, and search and transactions costs tend to zero, bid-ask spreads of all market makers and middlemen are forced to zero, and a fully efficient Walrasian equilibrium outcome emerges.