Endogenous Inequality in Decentralized Two-Sided Markets

Dmitri Kuksov ()
Additional contact information
Dmitri Kuksov: Naveen Jindal School of Management, University of Texas at Dallas, Richardson, Texas 75080

Marketing Science, 2024, vol. 43, issue 6, 1299-1316

Abstract: This paper examines whether and under what conditions one should expect equilibrium inequality in markets where agents in each of two populations look for an optimal alternative from the other population through a costly sequential search. It shows that a unique stable equilibrium may involve inequality between ex ante identical populations, especially if search costs are low. A consequence is that a one-time intervention to correct inequality in a repeated game may not achieve a lasting equality outcome. In addition, in such markets, a search cost reduction may increase inequality by increasing expected payoffs in one population and reducing them in the other. Even worse, a search cost reduction may reduce the sum of all payoffs, that is, reduce the social welfare. Furthermore, allowing individual agents to offer monetary payments to facilitate acceptance by the counterparty may increase inequality and make the disadvantaged population even more worse off.

Keywords: game theory; endogeneity; analytic models; inequity; search; equality (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1287/mksc.2022.0236 (application/pdf)

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:inm:ormksc:v:43:y:2024:i:6:p:1299-1316

Access Statistics for this article

More articles in Marketing Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().