![]() ![]() As goods exchange hands from one middleman to the other, their prices inflate.Ī higher price is charged at each junction to cover the cost of warehousing, insurance, transportation, advertising, etc. Disadvantages of Middlemenĭespite the many advantages that middlemen can offer, some people believe that middlemen do more harm than good and should be eliminated. They benefit from other services of middlemen, such as advertising and delivery. By specializing in functions such as banking, warehousing, transportation, underwriting, etc., they bring the economic benefits of specialization and division of labor to the market.īuyers gain access to the right quantities of goods and services close to their homes through the intermediary channels. In addition to constantly matching the supply and demand in the market, middlemen provide valuable feedback to the producers about their market offering. Both consumers and producers stand to benefit from their services. ![]() Intermediaries are important players in every market. It is the middlemen in the process chain who assume the risks of theft, perishability, and other potential hazards.
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