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Evaluating the Efficiency of Regulation in Matching Markets with Distributional Disparities

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  • Kei Ikegami
  • Atsushi Iwasaki
  • Akira Matsushita
  • Kyohei Okumura

Abstract

Cap-based regulations are widely used to address distributional disparities in matching markets, but their efficiency relative to alternative instruments such as subsidies remains poorly understood. This paper develops a framework for evaluating policy interventions by incorporating regional constraints into a transferable utility matching model. We show that a policymaker with aggregate-level match data can implement a taxation policy that maximizes social welfare and outperforms any cap-based policy. Using newly collected data from the Japan Residency Matching Program, we estimate participant preferences and simulate counterfactual match outcomes under both cap-based and subsidy-based policies. The results reveal that the status quo cap-based regulation generates substantial efficiency losses, whereas small, targeted subsidies can achieve similar distributional goals with significantly higher social welfare.

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  • Kei Ikegami & Atsushi Iwasaki & Akira Matsushita & Kyohei Okumura, 2022. "Evaluating the Efficiency of Regulation in Matching Markets with Distributional Disparities," Papers 2205.14387, arXiv.org, revised Jul 2025.
    • Handle: RePEc:arx:papers:2205.14387
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    References listed on IDEAS

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