Matching markets with middlemen under transferable utility

Ata Atay, Eric Bahel and Tamás Solymosi

Papers from arXiv.org

Abstract: This paper studies matching markets in the presence of middlemen. In our framework, a buyer-seller pair may either trade directly or use the services of a middleman; and a middleman may serve multiple buyer-seller pairs. Direct trade between a buyer and a seller is costlier than a trade mediated by a middleman. For each such market, we examine an associated cooperative game with transferable utility. First, we show that an optimal matching for a matching market with middlemen can be obtained by considering the two-sided assignment market where each buyer-seller pair is allowed to use the mediation service of the middlemen free of charge and attain the maximum surplus. Second, we prove that the core of a matching market with middlemen is always non-empty. Third, we show the existence of a buyer-optimal core allocation and a seller-optimal core allocation. In general, the core does not exhibit a middleman-optimal matching. Finally, we establish the coincidence between the core and the set of competitive equilibrium payoff vectors.

Date: 2021-09, Revised 2022-01
New Economics Papers: this item is included in nep-com, nep-des, nep-gth, nep-isf, nep-mic and nep-upt
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Journal Article: Matching markets with middlemen under transferable utility (2023)
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