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Price Discrimination and Efficient Matching

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Author Info
Damiano, Ettore
Li, Hao

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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 exclusive meeting places, where agents randomly form pairwise matches. We make the standard assumption that the match value function exhibits complementarities, so that matching types at equal percentiles maximizes total match value and is efficient. We provide necessary and sufficient conditions for the revenue-maximizing sorting to be efficient. These conditions require the match value function, modified to incorporate the incentive cost of eliciting private type information, to exhibit complementarities along the efficient path of matching types at equal percentiles.

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Paper provided by Microeconomics.ca Website in its series Micro Theory Working Papers with number damiano-05-03-21-12-21-58.

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Date of creation: 21 Mar 2005
Date of revision: 22 Mar 2005
Handle: RePEc:ubc:pmicro:damiano-05-03-21-12-21-58

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Lones Smith, 2006. "The Marriage Model with Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1124-1146, December. [Downloadable!] (restricted)
  2. Bergemann, Dirk & Pesendorfer, Martin, 2001. "Information Structures in Optimal Auctions," CEPR Discussion Papers 2991, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Ettore Damiano & Hao Li, 2004. "Unraveling of Dynamic Sorting," 2004 Meeting Papers 174, Society for Economic Dynamics. [Downloadable!]
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  4. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
  5. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  6. Burdett, Ken & Coles, Melvyn G, 1997. "Marriage and Class," The Quarterly Journal of Economics, MIT Press, vol. 112(1), pages 141-68, February.
  7. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer. [Downloadable!] (restricted)
  8. Inderst, Roman, 2001. "Screening in a Matching Market," Review of Economic Studies, Blackwell Publishing, vol. 68(4), pages 849-68, October.
  9. Vives, X., 1988. "Nash Equilibrium With Strategic Complementarities," UFAE and IAE Working Papers 107-88, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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  10. Bloch, Francis & Ryder, Harl, 2000. "Two-Sided Search, Marriages, and Matchmakers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(1), pages 93-115, February.
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  1. Hoppe, Heidrun C. & Moldovanu, Benny & Ozdenoren, Emre, 2007. "Coarse Matching and Price Discrimination," CEPR Discussion Papers 6041, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Hoppe, Heidrun C. & Moldovanu, Benny & Sela, Aner, 2006. "The Theory of Assortative Matching Based on Costly Signals," CEPR Discussion Papers 5543, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Eichhorn, Christoph & Sahm, Marco, 2007. "Why were FIFA World Cup Tickets so cheap?," Discussion Papers in Economics 1357, University of Munich, Department of Economics. [Downloadable!]
  4. Damiano, Ettore & Li, Hao, 2005. "Competing Matchmaking," Micro Theory Working Papers damiano-05-01-25-10-08-07, Microeconomics.ca Website, revised 18 Oct 2005. [Downloadable!]
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