【主讲】Yiyi Zhou (Stony Brook University)
【主题】Middlemen as Informational Intermediaries: Evidence from the Used Car Market
【时间】2017年6月20日 (周二) 15：30-17：00
【地点】上海财经大学经济学院楼401室
【语言】英文
【摘要】 In modern economy, transactions are almost exclusively made through a variety of middlemen such as retailers, dealers, brokers, etc. Why do middlemen exist? One obvious rationale is offered by Rubinstein and Wolinsky (1987): transactions through middlemen can save trade parties' search expenses in decentralized markets. Another popular justification is offered by Biglaiser (1993) and Lizzeri (1999): middlemen can serve as informational intermediaries (or certifiers) in lemon markets. We jointly test the existence of asymmetric information and the role of middlemen as informational intermediaries in the used car market, a classical example of lemon market. We present a parsimonious theoretical model of the used car market in which sellers are better informed about the product quality than buyers. Middlemen (car dealers) who buy cars from sellers and sell to buyers have better screening technology and select better quality cars. Their informational advantage is valued by the market and hence they enjoy price premium over individual sellers. The existence of middlemen has an adverse selection effect on the decentralized market, which further reinforces their price premium. As the product ages, quality depreciates and products are more likely to be lemons, and hence they are less likely to be traded through middlemen and middlemen's premium increases. We analyze a rich registration data that includes the universal used car transactions in Virginia, U.S. from 2007 to 2014. For each transaction, we observe the transaction date, price, seller, buyer, and detailed car characteristics. Consistent with our theoretical predictions, we find that (i) dealers' share declines in car age; (ii) dealer price premium in dollars is a hump shape of car age; (iii) dealer price premium in percentage increases in car age; (iv) dealer price premium in percentage is higher for unreliable models; and (v) cars that are bought from individual sellers are more likely to be resold quickly after purchase. Therefore, we conclude that asymmetric information exists and middlemen do serve as informational intermediaries in the used car market.
