Market Microstructure

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 why firms arise in a market equilibrium with costly transactions. 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 with existing economic theories of the firm, including neoclassical, industrial-organization, transaction-cost, and principal-agent models.

First sentence: Firms create and manage markets by acting as intermediaries between buyers and sellers.

Year

1998

Language

English

Publisher

Cambridge University Press

Editions

4

Pages

404

ISBN

9780521650250

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