Many-to-Many Matching and Price Discrimination

Renato Gomes and Alessandro Pavan

Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science

Abstract: We study centralized many-to-many matching in markets where agents have private information about (vertical) characteristics that determine match values. Our analysis reveals how matching patterns reflect cross-subsidization between sides. Agents are endogenously partitioned into consumers and inputs. At the optimum, the costs of procuring agents-inputs are compensated by the gains from agents-consumers. We show how such cross-subsidization can be achieved through matching rules that have a simple threshold structure and are assortative in the weak-order (set inclusion) sense. We then deliver testable predictions relating the optimal matching rules and price schedules to the distribution of the agents’ characteristics. The analysis has implications for the design of large matching intermediaries, such as advertising exchanges, business-to-business platforms, and online job-matching agencies.

Keywords: vertical matching markets; many-to-many matching; asymmetric information; mechanism design; cross-subsidization JEL Classification: D82 (search for similar items in EconPapers)
Date: 2014-06-01
New Economics Papers: this item is included in nep-cta, nep-gth, nep-mic and nep-mkt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://www.kellogg.northwestern.edu/research/math/papers/1578.pdf main text (application/pdf)

Related works:
Journal Article: Many-to-many matching and price discrimination (2016)
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:nwu:cmsems:1578

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Discussion Papers from Northwestern University, Center for Mathematical Studies in Economics and Management Science Center for Mathematical Studies in Economics and Management Science, Northwestern University, 580 Jacobs Center, 2001 Sheridan Road, Evanston, IL 60208-2014. Contact information at EDIRC.
Bibliographic data for series maintained by Fran Walker ( this e-mail address is bad, please contact ).