This paper examines how the introduction of a direct trade alternative for buyers and sellers affects competition among middlemen. Direct trade makes middlemen’s supply and demand functions depend on both bid and ask prices, a feature we term interdependence. A simple model is used to...

This paper analyses competition between direct and intermediated trade. We show that middlemen’s supply and demand depend on both their bid and ask prices if sellers and buyers have the alternative of trading directly. Multiplicity also prevails. Direct trade does not constrain the market...