Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/97247
Authors: 
Gomes, Renato
Pavan, Alessandro
Year of Publication: 
2013
Series/Report no.: 
Discussion Paper, Center for Mathematical Studies in Economics and Management Science 1559
Abstract: 
We develop a theory of price discrimination in many-to-many matching markets in which agents' preferences are vertically and horizontally differentiated. The optimal plans induce negative assortative matching at the margin: agents with a low value for interacting with other agents are included in the matching sets of only those agents from the opposite side whose value for matching is sufficiently high (cross-subsidization). We deliver testable predictions relating the optimal matching plans and price schedules to the distribution of the agents' preferences and attractiveness. The analysis has implications for the design of business-to-business platforms, advertising, and cable TV packages.
Subjects: 
many-to-many matching
two-sided markets
networks
asymmetric information
incentives
mechanism design
many-to-many matching
two-sided markets
networks
asymmetric information
incentives
mechanism design
JEL: 
D82
Document Type: 
Working Paper

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