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Matching Networks with Bilateral Contracts

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  • Hatfield, John William

    (Stanford University)

  • Kominers, Scott Duke

    (Harvard University)

Abstract

We introduce a model in which firms trade goods via bilateral contracts which specify a buyer, a seller, and the terms of the exchange. This setting subsumes (many-to- many) matching with contracts, as well as supply chain matching. When firms' relationships do not exhibit a supply chain structure, stable allocations need not exist. By contrast, in the presence of supply chain structure, a natural substitutability condition characterizes the maximal domain of firm preferences for which stable allocations always exist. Furthermore, the classical lattice structure, rural hospitals theorem, and one-sided strategy-proofness results all generalize to this setting.

Suggested Citation

  • Hatfield, John William & Kominers, Scott Duke, 2010. "Matching Networks with Bilateral Contracts," Research Papers 2050, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:2050
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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