American Economic Journal:
Microeconomics
ISSN 1945-7669 (Print) | ISSN 1945-7685 (Online)
Matching in Networks with Bilateral Contracts
American Economic Journal: Microeconomics
vol. 4,
no. 1, February 2012
(pp. 176–208)
Abstract
We introduce a model in which firms trade goods via bilateral contracts which specify a buyer, a seller, and the terms of the exchange. This setting subsumes (many-to-many) matching with contracts, as well as supply chain matching. When firms' relationships do not exhibit a supply chain structure, stable allocations need not exist. By contrast, in the presence of supply chain structure, a natural substitutability condition characterizes the maximal domain of firm preferences for which stable allocations are guaranteed to exist. Furthermore, the classical lattice structure, rural hospitals theorem, and one-sided strategy-proofness results all generalize to this setting. (JEL C78, D85, D86, L14)Citation
Hatfield, John William, and Scott Duke Kominers. 2012. "Matching in Networks with Bilateral Contracts." American Economic Journal: Microeconomics, 4 (1): 176–208. DOI: 10.1257/mic.4.1.176JEL Classification
- C78 Bargaining Theory; Matching Theory
- D85 Network Formation and Analysis: Theory
- D86 Economics of Contract: Theory
- L14 Transactional Relationships; Contracts and Reputation; Networks
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