Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/213442 
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 338
Publisher: 
University of Zurich, Department of Economics, Zurich
Abstract: 
We examine two-sided markets where players arrive stochastically over time and are drawn from a continuum of types. The cost of matching a client and provider varies, so a social planner is faced with two contending objectives: a) to reduce players' waiting time before getting matched; and b) to form efficient pairs in order to reduce matching costs. We show that such markets are characterized by a quick or cheap dilemma: Under a large class of distributional assumptions, there is no 'free lunch', i.e., there exists no clearing schedule that is simultaneously optimal along both objectives. We further identify a unique breaking point signifying a stark reduction in matching cost contrasted by an increase in waiting time. Generalizing this model, we identify two regimes: one, where no free lunch exists; the other, where a window of opportunity opens to achieve a free lunch. Remarkably, greedy scheduling is never optimal in this setting.
Subjects: 
dynamic matching
online markets
market design
JEL: 
D47
C78
C60
D80
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size
591.59 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.