middlemen

Middlemen are intermediaries who connect buyers and sellers, facilitating exchange and reducing transaction costs. They perform activities such as information gathering, negotiation, screening, logistics, financing, and risk bearing. Middlemen appear across markets, from goods and services to finance and information markets. By matching supply and demand more efficiently than direct exchanges, they can shorten search times and aid price discovery.

Common types include brokers and agents, wholesalers and distributors, retailers, and platform-based intermediaries. Brokers and agents arrange deals without taking ownership; wholesalers buy in bulk and resell; retailers sell to final consumers. Platform intermediaries—online marketplaces and apps—connect buyers and sellers, sometimes providing payments, escrow, and ratings.

Economists describe middlemen as adding value by reducing information asymmetry, standardizing contracts, coordinating logistics, and providing financing or inventory. They can also increase efficiency through scale. However, intermediaries can raise costs via margins at multiple stages and may impede competition if control over channels concentrates power.

Regulation varies by sector and jurisdiction, with licensing and disclosure requirements for real estate, insurance, and securities brokers. Critics emphasize possible market power abuses, while supporters emphasize risk management, service quality, and access to markets for smaller producers.

Technology has reshaped many middleman roles, especially in e-commerce and finance. Online marketplaces reduce search costs and enable direct or mediated exchanges. Yet intermediaries remain important in logistics, professional services, and regulated industries, often evolving to offer value-added services beyond simple matching.