Matching strategic agents on a two-sided platform

Masaki Aoyagi and Seung Han Yoo

Games and Economic Behavior, 2022, vol. 135, issue C, 271-296

Abstract: A platform offers sellers and buyers trading opportunities by creating one-to-one matches between them. A matching mechanism specifies subscription fees and the probabilities with which each seller type is matched with each buyer type. When the subscribers are fully strategic in their interactions with their matched partners, the optimal mechanism may not employ socially efficient positive assortative matching (PAM) but instead focus on the extraction of the agents' informational rents. In alternative scenarios in which the platform exercises stronger control over the subscribers' interactions, the optimal mechanism employs PAM but may create distortions by blocking some efficient transactions.

Keywords: Assortative; Screening; Subscription; Two-sided market; Revenue maximization (search for similar items in EconPapers)
JEL-codes: D42 D47 D62 D82 L12 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:135:y:2022:i:c:p:271-296

DOI: 10.1016/j.geb.2022.06.007

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