Intermediaries

Intermediaries are entities that stand between two or more parties in a transaction or exchange, helping to initiate, complete, or facilitate a result. By pooling information, resources, and capabilities, they reduce search and transaction costs, bridge information gaps, and enable specialization. Common examples include wholesalers and retailers who connect producers with customers, brokers who match buyers with sellers, banks and other financial institutions that mobilize capital and offer payment and credit services, and platforms that aggregate goods, services, or data.

Intermediaries can be categorized by function. Financial intermediaries channel funds between savers and borrowers and manage risk; trade and logistics intermediaries coordinate storage, transport, and distribution; and information intermediaries collect, evaluate, or present data and assist with decision making. Digital platforms and marketplaces act as multisided intermediaries by connecting disparate user groups and creating network effects. Intermediaries may also provide ancillary services such as rating, verification, escrow, insurance, or dispute resolution.

Impact and considerations: Intermediaries improve market efficiency, liquidity, and consumer access, but they can also concentrate market power, raise entry barriers for suppliers, and create privacy or conflicts of interest concerns. Fee structures and opaque practices can affect prices and choice. In legal contexts, intermediaries may be subject to liability regimes that vary by jurisdiction, with some allowing protection from liability for user-generated content if they act as pass-through conduits and comply with takedown or removal requests.

Historical note: Intermediaries have long played a central role in trade, logistics, and finance. With digital technology, their functions have evolved toward platforms and network-based models, prompting ongoing debate about regulation, competition, and governance.