This essay discusses some things we have learned about markets, in the process of designing marketplaces to fix market failures. To work well, marketplaces have to provide thickness, i.e. they need to attract a large enough proportion of the potential participants in the market; they have to overcome the congestion that thickness can bring, by making it possible to consider enough alternative transactions to arrive at good ones; and they need to make it safe and sufficiently simple to participate in the market, as opposed to transacting outside of the market, or having to engage in costly and risky strategic behavior. I'll draw on recent examples of market design ranging from labor markets for doctors and new economists, to kidney exchange, and school choice in New York City and Boston.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
13530.
Length: Date of creation: Oct 2007 Date of revision: Handle: RePEc:nbr:nberwo:13530
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Find related papers by JEL classification: A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory D02 - Microeconomics - - General - - - Institutions: Design, Formation, and Operations D4 - Microeconomics - - Market Structure and Pricing L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
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