Abstract
We study platform markets in which agents arrive gradually, experience changes to their preferences over time, and are frequently re-matched. We introduce simple auctions specifically designed for such markets. Upon joining, agents select a status that determines the weight assigned to their future bids. Each match is then assigned a score that depends on the agents' reciprocal bids and status. The matches maximizing the sum of the bilateral scores are implemented. Under certain conditions, such auctions maximize profits, welfare, or a combination of the two. We use the results to shed light on the distortions due to platforms' market power.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 32-62 |
| Number of pages | 31 |
| Journal | RAND Journal of Economics |
| Volume | 53 |
| Issue number | 1 |
| DOIs | |
| State | Published - Mar 1 2022 |
Funding
For helpful comments and suggestions, we are grateful to the Editor, Gary Biglaiser, anonymous referees, Dirk Bergemann, Yeon‐Koo Che, Eddie Dekel, Drew Fudenberg, Benjamin Hermalin, Terence Johnson, Fuhito Kojima, Benny Moldovanu, Larry Samuelson, Rakesh Vohra, Jean Tirole, Asher Wolinsky, Leeat Yariv, and seminar participants at various conferences and workshops where this work was presented. Matteo Camboni provided excellent research assistance. Pavan also thanks the National Science Foundation for financial support under the grant SES 1530798 and Bocconi University for its hospitality during the 2017–2018 academic year. Fershtman gratefully acknowledges funding by the German Research Foundation (DFG) through CRC TR 224 (Project B1). The usual disclaimer applies.
ASJC Scopus subject areas
- Economics and Econometrics