Market Microstructure: Intermediaries and the Theory of the Firm [Paperback]

Daniel F. Spulber (Author)

Book Description

Publication Date: April 13, 1999 | ISBN-10: 0521659787 | ISBN-13: 978-0521659789

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.

Editorial Reviews

Review

"Market Microstructure provides a rich new theoretical analysis of the role of firms in markets. It argues convincingly that by acting as intermediaries, firms can alleviate the problems of adverse selection, moral hazard, and high search costs, and can encourage valuable investment. Using elegantly simple models, this book offers deep new insights into why firms emerge and how markets function." Paul Milgrom, Stanford University

"Dan Spulber has been among the foremost contributors to the recent research on the role of firms as intermediaries (i.e., as middlemen). Different researchers have focused on differing roles for the firm, including reducing costs due to asymmetric information, search and matching, adverse selection, transactions costs, and agency. His new book provides a clear presentation of these developments that is outstanding for its breadth and depth, and for the order and organization he brings to a challenging topic." James Friedman, University of North Carolina, Chapel Hill

"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

Book Description

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 prinicipal-agent models.

Product Details

• Paperback: 408 pages
• Publisher: Cambridge University Press (April 13, 1999)
• Language: English
• ISBN-10: 0521659787
• ISBN-13: 978-0521659789
• Product Dimensions: 8.9 x 6 x 1.3 inches
• Shipping Weight: 1.5 pounds (View shipping rates and policies)
• Average Customer Review: 5.0 out of 5 stars  See all reviews (2 customer reviews)
• Amazon Best Sellers Rank: #1,282,921 in Books (See Top 100 in Books)

More About the Author

Daniel F. Spulber is the Elinor Hobbs Distinguished Professor of International Business and Professor of Management Strategy at the Kellogg School of Management, Northwestern University, where he has taught since 1990. He is also Professor of Law at the Northwestern University Law School (Courtesy). He received his Ph.D. in economics in 1979 and his M.A. in economics in 1976 from Northwestern University and his B.A. in economics in 1974 from the University of Michigan. Spulber has taught at Brown University, the University of Southern California, and the California Institute of Technology.

Spulber has received eight National Science Foundation grants, three Searle Fund Grants , and two Ewing Marion Kauffman Foundation Grants for economic research. Spulber is the founding editor of the Journal of Economics & Management Strategy published by Wiley-Blackwell Publishing.

Spulber is the founder of Kellogg's International Business & Markets Program. Spulber's research is in the areas of International Economics, Industrial Organization, Microeconomic Theory, Management Strategy, and Law. He has published numerous journal articles in economics journals and law reviews, including the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Review of Economic Studies, Journal of Economic Theory, Rand Journal of Economics, International Economic Review, Journal of Economic Perspectives, Columbia Law Review, New York University Law Review, Harvard Journal on Law and Public Policy, Journal of Competition Law & Economics, and Yale Journal on Regulation.

Spulber is the author of twelve books: The Theory of the Firm: Microeconomics with Endogenous Entrepreneurs, Firms, Markets, and Organizations, 2009, Cambridge: Cambridge University Press, Economics & Management of Competitive Strategy, 2009, New Jersey: World Scientific Press, Networks in Telecommunications: Economics and Law with Christopher Yoo, 2009, Cambridge: Cambridge University Press, Global Competitive Strategy, 2007, Cambridge: Cambridge University Press; Management Strategy, 2004, McGraw Hill; Famous Fables of Economics: Myths of Market Failures, edited, 2002, Blackwell Publishing; Market Microstructure: Intermediaries and the Theory of the Firm 1999, Cambridge University Press; The Market Makers: How Leading Companies Create and Win Markets, 1998, McGraw-Hill/ Business Week Books; Deregulatory Takings and the Regulatory Contract: The Competitive Transformation of Network Industries in the United States with J. Gregory Sidak, 1997, Cambridge University Press; Protecting Competition from the Postal Monopoly with J. Gregory Sidak, 1996, American Enterprise Institute; Regulation and Markets, 1989, M.I.T. Press; and Essays in the Economics of Renewable Resources, edited with Leonard J. Mirman, 1982, Elsevier-North Holland.

Customer Reviews

Most Helpful Customer Reviews

6 of 8 people found the following review helpful:

5.0 out of 5 stars A theory of intermiadiation, April 7, 2000

By 

"evangelosk" (New York, NY USA) - See all my reviews

This review is from: Market Microstructure: Intermediaries and the Theory of the Firm (Paperback)

Intermediaries play a significant role in market economies. The author identifies that role and develops a conceptual framework of the major functions of intermediaries in markets. The main idea, which goes beyond the classical dichotomy of firms vs. markets, is simple but powerful: firms create and manage markets. I think it is a book that should be read by everyone interested in understanding how markets work.

3 of 5 people found the following review helpful:

5.0 out of 5 stars Providing ideas of intermediary firm, May 6, 2001

By 

MA. Econ. Student BKK (Bangkok, Thailand) - See all my reviews

This review is from: Market Microstructure: Intermediaries and the Theory of the Firm (Hardcover)

This book provides concepts of intermediary firm and its functions in economy. The author starts by introducing Princing Mechanism and Adjustment (with uncertainry) in the first part. He give use a fancy applications in Economic Theory (Gen. Eqlm.) and competition among intermediaries in part II. Part III, he seperates the concepts of matching and searching. Part IV, Adverse Selection and Moral Harzard problems are also given. Part V is Transaction Cost. Part VI is Agency Theory. All are presented with intermediary concepts. The author gives ideas about intermediary in many aspects by collecting lots of papers and conceptualization of thems. The concepts can be used in financial and physical markets. It is indispensable for students who want to study Market Microstructure, Intermediary and E-commerce Concept.