Dynamic matching with transfers

Tyler Maxey

Economics Letters, 2023, vol. 233, issue C

Abstract: I study a two-sided market of dynamic matching with sequential arrivals. Agents trade off waiting to match with a more desirable agent with immediately matching with a less desirable agent. I study the consequences of transfer availability for two protocols: first-in-first-out (FIFO) and last-in-first-out (LIFO). For FIFO, welfare is weakly greater with transfers than without. For LIFO, there is a range of waiting costs such that welfare is weakly lower with transfers than without. For sufficiently low waiting costs, the equilibrium welfare for FIFO with transfers remains strictly lower than socially optimal. Thus, unlike in a static matching setting, transfers in my dynamic matching setting do not generate utilitarian efficient outcomes.

Keywords: Dynamic Matching; Matching with Transfers; Mechanism Design (search for similar items in EconPapers)
JEL-codes: C61 C78 D47 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523003919

DOI: 10.1016/j.econlet.2023.111366

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