Price Discrimination in Matching Markets

39 Pages Posted: 8 Apr 2003

See all articles by Ettore Damiano

Ettore Damiano

University of Toronto - Department of Economics

Hao Li

University of Toronto - Department of Economics; Queen's University - Department of Economics

Date Written: November 12, 2002

Abstract

This paper considers the problem of a monopoly matchmaker that uses a schedule of entrance fees to sort different types of agents on the two sides of a matching market into different markets, where agents randomly form pairwise matches. We make the standard assumption that the match value function exhibits complementarities, so that the efficient matching is positive assortative. We show that a necessary and sufficient condition for the revenue-maximizing market structure to be efficient requires a suitably defined virtual match value function to exhibit complementarities in the positive assortative matching. Applications to exclusion policies and one-sided subsidies are provided.

Suggested Citation

Damiano, Ettore and Li, Hao, Price Discrimination in Matching Markets (November 12, 2002). Available at SSRN: https://ssrn.com/abstract=369781 or http://dx.doi.org/10.2139/ssrn.369781

Ettore Damiano (Contact Author)

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-946-5821 (Phone)
416-978-6713 (Fax)

Hao Li

University of Toronto - Department of Economics ( email )

150 St. George Street
Toronto, Ontario M5S 3G7
Canada
416-978-5105 (Phone)

Queen's University - Department of Economics ( email )

Dunning Hall
Kingston, Ontario K7L 3N6
Canada
613-533-2275 (Phone)
613-533-6668 (Fax)

HOME PAGE: http://www.econ.queensu.ca/pub/faculty/li/

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