A Two-Stage Model of Assignment and Market

Akihiko Matsui and Megumi Murakami
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Akihiko Matsui: Faculty of Economics, The University of Tokyo
Megumi Murakami: Department of Economics, Northwestern University

No CIRJE-F-1112, CIRJE F-Series from CIRJE, Faculty of Economics, University of Tokyo

Abstract: Centralized matching mechanisms and decentralized markets have been widely studied to allocate indivisible objects. However, they have been analyzed separately. The present paper proposes a new framework, by explicitly formulating a two-stage model where objects are allocated through a matching mechanism in the first stage and traded in the second stage market. In addition, one divisible good called money may or may not be available in the market. Every player demands at most one unit of object besides money. The players may face different priorities at each object type in the first stage. Each object type has a limited amount of capacity, called quota. Each player has a quasi-linear utility function. The present analysis sets forth the equivalence conditions under which stability and efficiency are attained in equilibrium.

Pages: 30 pages
Date: 2019-01
New Economics Papers: this item is included in nep-des, nep-mic and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:tky:fseres:2019cf1112

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