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Marriott Marquis, Grand Ballroom 4
American Economic Association
Matching under Inequality: Implications for Policy
Saturday, Jan. 4, 2020 8:00 AM - 10:00 AM (PDT)
- Chair: Scott Duke Kominers, Harvard Business School
Redistribution in Matching Markets
AbstractWe consider policy design for matching markets with inequality. We use mechanism design to identify the optimal trade-off between efficiency and redistribution, uncovering how the structure of agents' preferences over partners affects the scope for aggregate welfare improvement. When participation costs are correlated with match values, a form of assortative matching mediated by rationing is optimal. Wealthier buyers often contribute to subsidies that help poorer buyers buy goods from poorer sellers. Our theory has implications for optimal college aid policies, as well as subsidy schemes in service marketplaces like rideshare.
Matching and Wealth (Effects)
AbstractThis paper develops and studies matching models with continuous transfers in which utility is imperfectly transferable between agents due to wealth effects. We provide sufficient conditions for the existence of competitive equilibria—and of stable matchings—that allow for gross complementarities between interactions. We also study how wealth effects change cooperative foundations for competitive equilibrium.
- D4 - Market Structure, Pricing, and Design
- H0 - General