Are Middlemen Competitive?

We model competition among middlemen who buy from sellers and sell to buyers. If middlemen compete in bid prices in the first stage, a Walrasian equilibrium results. If, instead, they compete in quantities, a Cournot equilibrium results. This is so regardless of whether middlemen set ask prices or demand levels in the second stage. It also holds if the order of trade is reversed (i.e., with forward selling). We extended the analysis by direct trade makes a Walrasian outcome more likely. 

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