Market Microstructure
Intermediaries and the Theory of the Firm

Spulber presents a theory of the firm based on its economic role as an intermediary between customers and suppliers.

Daniel F. Spulber (Author)

9780521659789, Cambridge University Press

Paperback, published 13 April 1999

408 pages, 39 b/w illus. 2 tables
23 x 15.3 x 2.3 cm, 0.545 kg

"Spulber's book provides an innovative and comprehensive look at two important issues--the formation and boundaries of firms and the microstructure of markets. This book does an excellent job of combining different models in a unified approach to studying firms and markets. I believe it will be an excellent text for students of this subject. " Chaim Fershtman, Tel Aviv University

This book presents a theory of the firm based on its economic role as an intermediary between customers and suppliers. Professor Spulber demonstrates how the intermediation theory of the firm explains firm formation by showing how they arise in a market equilibrium. In addition, the theory helps explain how markets work by showing how firms select market-clearing prices. Models of intermediation and market microstructure from microeconomics and finance shed considerable light on the formation and market-making activities of firms. The intermediation theory of the firm is compared to existing economic theories of the firm including the neoclassical, industrial organization, transaction cost, and principal-agent models.

Preface and acknowledgements
Introduction
Part I. Market Microstructure and the Intermediation Theory of the Firm: 1. Market microstructure and intermediation
2. Price setting and intermediation by firms 3. Competition Part II. Competition and Market Equilibrium: 3. Competition between intermediaries
4. Intermediation and general equilibrium
Part III. Intermediation Versus Decentralized Trade: 5. Matching and intermediation by firms
6. Search and intermediation by firms
Part IV. Intermediation under Asymmetric Information: 7. Adverse selection in product markets
8. Adverse selection in financial markets
Part V. Intermediation and Transaction Costs: 9. Transaction costs and the contractual theory for the firm
10. Transaction costs and the intermediation theory of the firm
Part VI. Intermediation and Agency: 11. Agency and the organizational-incentive theory of the firm
12. Agency and the intermediation theory of the firm
Conclusion.

Subject Areas: Microeconomics [KCC]