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Bundling Incentives in (Many-to-Many) Matching with Contracts

Jonathan Ma () and Scott Kominers
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Jonathan Ma: Harvard University

No 19-011, Harvard Business School Working Papers from Harvard Business School

Abstract: In many-to-many matching with contracts, the way in which contracts are specified can affect the set of stable equilibrium outcomes. Consequently, agents may be incentivized to modify the set of contracts upfront. We consider one simple way in which agents may do so: unilateral bundling, in which a single agent links multiple contracts with the same counterparty together. We show that essentially no stable matching mechanism eliminates incentives for unilateral bundling. Moreover, we find that unilateral bundling can sometimes lead to Pareto improvement?and other times produces market power that makes one agent better off at the expense of others.

Keywords: Matching with contracts; Contract design; Bundling-proofness; Substitutability (search for similar items in EconPapers)
JEL-codes: C62 C78 D44 D47 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2018-08
New Economics Papers: this item is included in nep-cta, nep-des, nep-gth and nep-mic
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