Essays in Market Design

Open Access
- Author:
- Idem, Mehmet Hamdi Berk
- Graduate Program:
- Economics
- Degree:
- Doctor of Philosophy
- Document Type:
- Dissertation
- Date of Defense:
- June 13, 2022
- Committee Members:
- Ran Shorrer, Major Field Member
Chloe Tergiman, Outside Unit & Field Member
Vijay Krishna, Chair & Dissertation Advisor
Kalyan Chatterjee, Major Field Member
Marc Henry, Professor in Charge/Director of Graduate Studies
Nima Haghpanah, Major Field Member - Keywords:
- mechanism design
market design
matchings with transfers
abstract convexities
centralized markets
decentralized markets
market segmentation
financial economics
market stability
marketplaces - Abstract:
- In chapter 1, In this paper, I introduce a profit-maximizing centralized marketplace into a decentralized market with search frictions. Agents choose between the centralized marketplace and the decentralized bilateral trade. I characterize the optimal marketplace in this market choice game using a mechanism design approach. In an equilibrium, the centralized marketplace and the decentralized trade coexist. The thickness of the centralized marketplace in this equilibrium does not depend on the search frictions. The profit of the marketplace decreases as the search frictions in the decentralized market are reduced. However, it is always higher than the half of the profit when the frictions are prohibitively high for decentralized trade. I derive conditions under which, this equilibrium results in higher welfare than either institution on its own. In chapter 2, I provide two characterizations for the existence of stable matchings in this environment. Moreover, if `part-time' contracts are allowed, I show that there is always a stable matching. Finally, I introduce a measure of instability in the market, measured as the amount of subsidy needed to `stabilize' an efficient outcome. In chapter 3, I show that the existence of a solution to a market design problem can be obtained as long as the designer's and the agents' preferences satisfy any sufficiently well-behaved abstract convexity, using `convex' price orders that rank bundles instead of price vectors. Walrasian Equilibrium is obtained as a special case.