Introduction to Part IX: Market intermediation

Most products and services are not sold directly from the producer to the final consumer but pass through intermediaries. Intermediaries and the services they offer are the focus of this last part of the book. We distinguish between the following four major roles of intermediaries.

1. Dealer The intermediary buys goods or services from suppliers and resells them to buyers.

2. Platform operator The intermediary provides a platform where buyers and sellers (or more generally various groups of agents with complementary businesses) are able to interact.

3. Infomediary The intermediary acts as an information gatekeeper, or ‘infomediary’, allowing consumers to access and process more efficiently information about prices or the match value of products and services.

4. Trusted third-party The intermediary acts as a certification agent by revealing information about a product's or seller's reliability or quality.

The intermediary essentially chooses whether to operate as a dealer or a platform operator. However, hybrid business models are also possible, as the well-known electronic intermediary Amazon nowadays exemplifies. The other two roles are complementary in nature and are often the main reason for intermediaries to be important for the functioning of markets. Amazon also fulfils these two roles, as we now detail it.

When it started in 1995, Amazon.com was a pure online dealer: first of books, then of music CDs, videotapes, DVDs and software, and later, of many other product categories (consumer electronics, toys and games, kitchenware, lawn and garden items, etc.).