The Spatial Origin of Commerce*

Abstract

Although dispersion raises productivity by relieving crowding, concentration promotes trade. The participation of specialist middlemen, who tend to cluster around the regional center, in the trading process would mitigate such tensions, for it becomes less urgent for others to scramble for central locations then from the increase in the density of economic activities around such locations. A city, populated by a cluster of middlemen, that serves as a platform for intermediate trade among producers in surrounding areas can exist without any increasing returns in production, transportation, and exchange. Indirect trade and pure commerce may, thus, have a spatial origin.

Buyers, Sellers and Middlemen: Variations on Search-Theoretic Themes

“…Other related papers includeKalai, Postlewaite and Roberts (1978),Rust and Hall (2003),Masters (2007Masters ( , 2008,Tse (2009) andBose and Sengupta (2010).…”

Flipping the Housing Market

“…Insofar as the flippers in our model act as middlemen between the original homeowners and the eventual end-user buyers, this paper contributes to the literature on middlemen in search and matching pioneered by Rubinstein and Wolinsky (1987). Previously, it was argued that middlemen could survive by developing reputations as sellers of high quality goods (Li, 1998), by holding a large inventory of differentiated products to make shopping less costly for others (Johri and Leach, 2002;Shevchenko, 2004;Smith, 2004), by raising the matching rate in case matching is subject to increasing returns (Masters, 2007), and by lowering distance-related trade costs for others (Tse, 2011). This paper studies the role of middlemen in the provision of market liquidity and the effects of any financing and bargaining advantages that middlemen may possess on the nature of equilibrium.…”

“…The asset values and housing prices referred to hereinafter are special cases of those in Lemma 13 in the Appendix. In particular, the equations for   and   are from(42) and(43), respectively, whereas the equation for   is from (41), evaluated at  ( ) = 0…”

Buyers, Sellers, and Middlemen: Variations on Search‐theoretic Themes

“…Bose and Sengupta () study intermediation in a search model where middlemen are always immediately available to buyers, and they can cater to repeat clientele. Tse () presents a model where agents are dispersed over space and trading costs increase with distance. In spatial equilibrium, middlemen choose to cluster at central locations, which helps economic activity and improves welfare.…”