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The Unreasonable Effectiveness of Optimal Transport in Economics

Author

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  • Alfred Galichon

    (NYU - NYU System, ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

Optimal transport has become part of the standard quantitative economics toolbox. It is the framework of choice to describe models of matching with transfers, but beyond that, it allows to: extend quantile regression; identify discrete choice models; provide new algorithms for computing the random coefficient logit model; and generalize the gravity model in trade. This paper offer a brief review of the basics of the theory, its applications to economics, and some extensions.

Suggested Citation

  • Alfred Galichon, 2021. "The Unreasonable Effectiveness of Optimal Transport in Economics," SciencePo Working papers Main hal-03936221, HAL.
    • Handle: RePEc:hal:spmain:hal-03936221
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03936221
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    References listed on IDEAS

    as
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    1. Gunsilius, Florian F., 2023. "A condition for the identification of multivariate models with binary instruments," Journal of Econometrics, Elsevier, vol. 235(1), pages 220-238.

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