Quick or Cheap? Breaking Points in Dynamic Markets

30 Pages Posted: 16 Jan 2020 Last revised: 8 Dec 2021

See all articles by Panayotis Mertikopoulos

Panayotis Mertikopoulos


Heinrich H. Nax

ETH Zürich; University of Zurich

Bary Pradelski

CNRS, Université Grenoble Alpes

Multiple version iconThere are 2 versions of this paper

Date Written: December 30, 2019


We examine two-sided markets where players arrive stochastically over time. The cost of matching a client and provider is a random variable whose distribution, but not its realization, is known, 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 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.

Keywords: dynamic matching, online markets, market design

JEL Classification: D47, C78, C60, D80

Suggested Citation

Mertikopoulos, Panayotis and Nax, Heinrich H. and Pradelski, Bary, Quick or Cheap? Breaking Points in Dynamic Markets (December 30, 2019). Available at SSRN: https://ssrn.com/abstract=3511444 or http://dx.doi.org/10.2139/ssrn.3511444

Panayotis Mertikopoulos

CNRS ( email )


Heinrich H. Nax

ETH Zürich ( email )

Rämistrasse 101
Zürich, 8092

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006

Bary Pradelski (Contact Author)

CNRS, Université Grenoble Alpes ( email )


HOME PAGE: http://cnrs.fr

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