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Quick or cheap? Breaking points in dynamic markets

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.
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https://hal.inria.fr/hal-03043688
Contributor : Panayotis Mertikopoulos <>
Submitted on : Monday, December 7, 2020 - 1:55:46 PM
Last modification on : Wednesday, January 6, 2021 - 2:56:03 PM

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  • HAL Id : hal-03043688, version 1

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Panayotis Mertikopoulos, Heinrich Nax, Bary Pradelski. Quick or cheap? Breaking points in dynamic markets. EC '20: The 21st ACM Conference on Economics and Computation, 2020, Budapest, Hungary. ⟨hal-03043688⟩

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