In Economics, how does a middleman reduce cost?

R

ross

New member
It doesn't make sense to me how a middle man in economics reduces the overall cost. Shouldn't the transaction be cheaper if there is no middleman involved?
 
I believe the premise is the middleman buys the product in the bulk thereby receiving a discount. In turn he marks it up a bit to make a profit from the entity he's selling to. The end result is a slight discount to that entity. That's my understanding, someone please correct me if I'm wrong.
 
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