American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Marketplaces, Markets, and Market Design
American Economic Review
vol. 108,
no. 7, July 2018
(pp. 1609–58)
(Complimentary)
Abstract
Marketplaces are often small parts of large markets, and both markets and marketplaces come in many varieties. Market design seeks to understand what marketplaces must accomplish to enable different kinds of markets. Marketplaces can have varying degrees of success, and there can be marketplace failures. I'll discuss labor markets like the market for new economists, and also markets for new lawyers and doctors that have suffered from the unraveling of appointment dates to well before employment begins. Markets work best if they enjoy social support, but some markets are repugnant in the sense that some people think they should be banned, even though others want to participate in them. Laws banning such markets often contribute to the design of illegal black markets, and this raises new issues for market designers. I'll briefly discuss markets and black markets for narcotics, marijuana, sex, and surrogacy, and the design of markets for kidney transplants, in the face of widespread laws against (and broader repugnance for) compensating organ donors. I conclude with open questions and engineering challenges.Citation
Roth, Alvin E. 2018. "Marketplaces, Markets, and Market Design." American Economic Review, 108 (7): 1609–58. DOI: 10.1257/aer.108.7.1609Additional Materials
JEL Classification
- A11 Role of Economics; Role of Economists; Market for Economists
- D40 Market Structure, Pricing, and Design: General
- D47 Market Design
- E26 Informal Economy; Underground Economy
- J40 Particular Labor Markets: General
- J44 Professional Labor Markets; Occupational Licensing