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Price competition between random and assortive matchmakers

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  • Chae, Suchan
  • Song, Jaehee

Abstract

We study price competition between heterogeneous matchmakers in a two-sided matching market. It is well known that when two passive matchmakers who provide random matching services compete with entrance fees, there exists no pure-strategy equilibrium. We show that when a passive matchmaker and an active matchmaker, who provides an assortive matching service, compete with entrance fees, there exists a pure-strategy equilibrium. We also provide welfare comparison between the duopoly and a monopoly operating both the passive and active networks.

Suggested Citation

  • Chae, Suchan & Song, Jaehee, 2017. "Price competition between random and assortive matchmakers," Mathematical Social Sciences, Elsevier, vol. 90(C), pages 63-72.
    • Handle: RePEc:eee:matsoc:v:90:y:2017:i:c:p:63-72
    DOI: 10.1016/j.mathsocsci.2017.06.003
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