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SSRN Electronic Journal
Article . 2014 . Peer-reviewed
Data sources: Crossref
EconStor
Research . 2014
Data sources: EconStor
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Exclusive Intermediation

Authors: Itay Fainmesser;

Exclusive Intermediation

Abstract

In this paper, we argue that an important function fulfilled by intermediaries is to facilitate trust by enabling social pressure towards the enforcement of informal agreements. To that end, we develop a new model that uses network theory to show that intermediaries who have exclusivity over a large enough number of interaction opportunities are able to exploit their position in the chains of interactions in the market to overcome incentive problems that would otherwise shut down the market. We derive conditions on the network structure under which intermediaries fulfill this function. Finally, we analyze two applications: (1) the market for short termapartment rentals; and (2) a financial market with investors and entrepreneurs. We provide additional examples suggesting that this paper uncovers an important channel through which intermediaries operate.

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Keywords

intermediation, Airbnb.com, ddc:330, strategic default, cooperation, trust, Networks, intermediation, long-term relationships, self-governance, community enforcement, trust, social capital, cooperation, strategic default, financial intermediation, Airbnb.com, financial intermediation, long-term relationships, social capital, self-governance, community enforcement, Networks

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    selected citations
    These citations are derived from selected sources.
    This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    3
    popularity
    This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
    Average
    influence
    This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
    Average
    impulse
    This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
    Average
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
3
Average
Average
Average
bronze