Specifying a Structural Matching Game of Trading Networks with Transferable Utility
American Economic Review · 2017 · Volume 107 · Issue 5
Abstract
Structural estimation of matching games with transferable utility, including matching games of trading networks and many-to-many matching, is increasingly popular in empirical work. I explore several modeling decisions that need to be made when specifying a structural model for a matching game. One decision is the choice of a game theoretic solution concept to impose in the structural model. I discuss pairwise stability, competitive equilibrium, and noncooperative games such as auctions. Another decision is whether to work with a continuum of agents or a finite number of agents. I explore other issues as well.
Keywords
Bargaining Theory, Matching Theory, Market Structure, Pricing, and Design: General, Network Formation and Analysis: Theory
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