MATCHING WITH COMPLEMENTARY CONTRACTS

In this paper, we show that stable outcomes exist in matching environments with complementarities, such as social media platforms or markets for patent licenses. Our results apply to both nontransferable and transferable utility settings, and allow for multilateral agreements and those with external...

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Bibliographic Details
Published in:Econometrica Vol. 88; no. 5; pp. 1793 - 1827
Main Authors: Rostek, Marzena, Yoder, Nathan
Format: Journal Article
Language:English
Published: Evanston Wiley 01.09.2020
Wiley Subscription Services, Inc
Blackwell Publishing Ltd
Subjects:
Algorithms
Antitrust law
Antitrust laws
Complementarities
contract design
Externality
Game theory
Markets
Mass media effects
matching with contracts
Patent law
Privacy
Social media
Social networks
stability
ISSN:0012-9682, 1468-0262
Online Access:Get full text
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Summary:In this paper, we show that stable outcomes exist in matching environments with complementarities, such as social media platforms or markets for patent licenses. Our results apply to both nontransferable and transferable utility settings, and allow for multilateral agreements and those with externalities. In particular, we show that stable outcomes in these settings are characterized by the largest fixed point of a monotone operator, and so can be found using an algorithm; in the nontransferable utility case, this is a one-sided deferred acceptance algorithm, rather than a Gale–Shapley algorithm. We also give a monotone comparative statics result as well as a comparative static on the effect of bundling contracts together. These illustrate the impact of design decisions, such as increased privacy protections on social media, or the use of antitrust law to disallow patent pools, on stable outcomes.
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ISSN:0012-9682
1468-0262
DOI:10.3982/ECTA16686