Quick or Cheap? Breaking Points in Dynamic Markets

Panayotis Mertikopoulos, Heinrich H. Nax and Bary Pradelski
Additional contact information
Panayotis Mertikopoulos: Université Grenoble Alpes
Heinrich H. Nax: Department of Humanities, Social and Political Sciences, Eidgenössische Technische Hochschule Zürich

No 2217, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: We examine two-sided markets where players arrive stochastically over time and are drawn from a continuum of types. The cost of matching a client and provider varies, so a social planner is faced with two contending objectives: a) to reduce players' waiting time before getting matched; and b) to form efficient pairs in order to reduce matching costs. We show that such markets are characterized by a quick or cheap dilemma: Under a large class of distributional assumptions, there is no 'free lunch', i.e., there exists no clearing schedule that is simultaneously optimal along both objectives. We further identify a unique breaking point signifying a stark reduction in matching cost contrasted by an increase in waiting time. Generalizing this model, we identify two regimes: one, where no free lunch exists; the other, where a window of opportunity opens to achieve a free lunch. Remarkably, greedy scheduling is never optimal in this setting.

Keywords: Dynamic matching; Online markets; Market design (search for similar items in EconPapers)
JEL-codes: C60 C78 D47 D80 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2019-12
New Economics Papers: this item is included in nep-des, nep-gth, nep-mic and nep-ore
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://cowles.yale.edu/sites/default/files/files/pub/d22/d2217.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cwl:cwldpp:2217

Ordering information: This working paper can be ordered from
Cowles Foundation, Yale University, Box 208281, New Haven, CT 06520-8281 USA
The price is None.

Access Statistics for this paper

More papers in Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University Yale University, Box 208281, New Haven, CT 06520-8281 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Brittany Ladd ().