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Stability in matching with externalities: Pairs competition and oligopolistic joint ventures

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  • Imamura, Kenzo
  • Konishi, Hideo
  • Pan, Chen-Yu

Abstract

This paper presents one-to-one matching and assignment problems with externalities across pairs. Examples include as pairs figure skating competition and joint ventures in oligopolistic markets. In these models, players care not only about their partners but also about what rival pairs are formed. Therefore, it is important for a deviating pair to know which matching will be realized after it deviates from a matching (via an effectiveness function) in order to define pairwise stable matching. We find that the assortative matching may fail to be pairwise stable under an effectiveness function commonly used in matching and coalition formation literature. In contrast, it is pairwise stable under a swapping effectiveness function which is natural in our environments. We discuss two generalizations of our model, intrinsic preferences over partners and pair-specific match qualities.

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  • Imamura, Kenzo & Konishi, Hideo & Pan, Chen-Yu, 2023. "Stability in matching with externalities: Pairs competition and oligopolistic joint ventures," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 270-286.
    • Handle: RePEc:eee:jeborg:v:205:y:2023:i:c:p:270-286
    DOI: 10.1016/j.jebo.2022.11.018
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    Cited by:

    1. Kenzo Imamura & Hideo Konishi, 2023. "Assortative Matching with Externalities and Farsighted Agents," Dynamic Games and Applications, Springer, vol. 13(2), pages 497-509, June.
    2. Hideo Konishi & Chen-Yu Pan & Dimitar Simeonov, 2023. "Formation of Teams in Contests: Tradeoffs Between Inter and Intra-Team Inequalities," Boston College Working Papers in Economics 1061, Boston College Department of Economics.

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    More about this item

    Keywords

    One-to-one matching; Matching with externalities; Pairwise stable matching; Coalition formation; Group contest; Joint ventures; Myopia; Farsightedness;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior

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