Quick or cheap? Breaking points in dynamic markets

Arbeitspapier

We examine two-sided markets where players arrive stochastically over time and are drawn from a continuum of types. The cost of matching a client and provider varies, so a social planner is faced with two contending objectives: a) to reduce players' waiting time before getting matched; and b) to form efficient pairs in order to reduce matching costs. We show that such markets are characterized by a quick or cheap dilemma: Under a large class of distributional assumptions, there is no 'free lunch', i.e., there exists no clearing schedule that is simultaneously optimal along both objectives. We further identify a unique breaking point signifying a stark reduction in matching cost contrasted by an increase in waiting time. Generalizing this model, we identify two regimes: one, where no free lunch exists; the other, where a window of opportunity opens to achieve a free lunch. Remarkably, greedy scheduling is never optimal in this setting.

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• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 338

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Market Design ; Bargaining Theory; Matching Theory ; Mathematical Methods; Programming Models; Mathematical and Simulation Modeling: General ; Information, Knowledge, and Uncertainty: General
• Thema: dynamic matching ; online markets ; market design

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Mertikopoulos, Panayotis ; Nax, Heinrich H. ; Pradelski, Bary S. R.
• Ereignis: Veröffentlichung
• (wer): University of Zurich, Department of Economics
• (wo): Zurich
• (wann): 2019

Weitere Informationen

• DOI: doi:10.5167/uzh-182597
• Handle: http://hdl.handle.net/10419/213442