Pricing And Investments In Matching Markets
Different markets are cleared by different types of prices - seller-specific prices that are uniform across buyers in some markets, and personalized prices tailored to the buyer in others. The authors examine a setting in which buyers and sellers make investments before matching in a competitive market. They introduce the notion of premuneration values - the values to the transacting agents prior to any transfers - created by a buyer-seller match. Personalized price equilibrium outcomes are independent of premuneration values and exhibit inefficiencies only in the event of "Coordination failures," while uniform-price equilibria depend on premuneration values and in general feature inefficient investments even without coordination failures.