Understanding Intermediation

Study Notes

Intermediation refers to the act of facilitating transactions or interactions between two or more parties.
It involves an intermediary, such as a person, organization, or platform, that connects buyers and sellers, or providers and users.

Financial intermediation: Banks, investment banks, and other financial institutions act as intermediaries between savers and borrowers, facilitating the flow of capital.
Commercial intermediation: Wholesalers, distributors, and retailers act as intermediaries between manufacturers and consumers, providing products and services.
Digital intermediation: Online platforms, such as e-commerce websites and social media, connect buyers and sellers, or users and providers.

Matching: Intermediaries connect buyers and sellers, or users and providers, who may not have otherwise found each other.
Risk reduction: Intermediaries can reduce the risk of transactions by providing guarantees, insurance, or other forms of protection.
Facilitation: Intermediaries can simplify transactions by providing infrastructure, logistics, and other support services.
Value-added services: Intermediaries can offer additional services, such as advice, consulting, or training, to enhance the transaction or interaction.

Increased efficiency: Intermediation can reduce transaction costs and increase the speed of transactions.
Improved access: Intermediation can increase access to products, services, or markets that may not have been available otherwise.
Enhanced quality: Intermediation can improve the quality of products or services by providing quality control, certification, or other forms of assurance.

Dependence on intermediaries: Parties may become too reliant on intermediaries, reducing their ability to negotiate or interact directly.
Power imbalance: Intermediaries may have too much power or influence over the transaction or interaction.
Intermediation costs: Intermediation can add costs, such as commissions, fees, or other charges, to the transaction or interaction.

Intermediation refers to the act of facilitating transactions or interactions between two or more parties.
It involves an intermediary, such as a person, organization, or platform, that connects buyers and sellers, or providers and users.

Financial intermediation: banks, investment banks, and other financial institutions act as intermediaries between savers and borrowers.
Commercial intermediation: wholesalers, distributors, and retailers act as intermediaries between manufacturers and consumers.
Digital intermediation: online platforms, such as e-commerce websites and social media, connect buyers and sellers, or users and providers.

Matching: intermediaries connect buyers and sellers, or users and providers, who may not have otherwise found each other.
Risk reduction: intermediaries can reduce the risk of transactions by providing guarantees, insurance, or other forms of protection.
Facilitation: intermediaries can simplify transactions by providing infrastructure, logistics, and other support services.
Value-added services: intermediaries can offer additional services, such as advice, consulting, or training, to enhance the transaction or interaction.

Increased efficiency: intermediation can reduce transaction costs and increase the speed of transactions.
Improved access: intermediation can increase access to products, services, or markets that may not have been available otherwise.
Enhanced quality: intermediation can improve the quality of products or services by providing quality control, certification, or other forms of assurance.

Dependence on intermediaries: parties may become too reliant on intermediaries, reducing their ability to negotiate or interact directly.
Power imbalance: intermediaries may have too much power or influence over the transaction or interaction.
Intermediation costs: intermediation can add costs, such as commissions, fees, or other charges, to the transaction or interaction.