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Competing Matchmaking

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  • Damiano, Ettore
  • Li, Hao

Abstract

We study how competing matchmakers use prices to sort participants into search markets, where they form random pairwise matches, and how equilibrium outcomes compare with monopoly in terms of prices, search market structure and sorting efficiency. The role of prices to facilitate sorting is compromised by the need to survive price competition. We show that the competitive outcome can be less efficient in sorting than the monopoly outcome in terms of total match value. In particular, price competition results in a high quality market that is insufficiently exclusive.

Suggested Citation

  • Damiano, Ettore & Li, Hao, 2005. "Competing Matchmaking," Microeconomics.ca working papers damiano-05-01-25-10-08-07, Vancouver School of Economics, revised 18 Oct 2005.
    • Handle: RePEc:ubc:pmicro:damiano-05-01-25-10-08-07
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    File URL: http://microeconomics.ca/ettore_damiano/DREW15.pdf
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    References listed on IDEAS

    as
    1. Ettore Damiano & Hao Li & Wing Suen, 2005. "Unravelling of Dynamic Sorting," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 1057-1076.
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    More about this item

    Keywords

    Overtaking; complementarity; market structure; market coverage; market differentiation;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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