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  • July 2018
  • Article
  • American Economic Review

Marketplaces, Markets, and Market Design

By: Alvin E. Roth
  • Format:Print
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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 as well as 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 as well as 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.

Keywords

Labor Market; Pricing; Market Design; Markets; Economics

Citation

Roth, Alvin E. "Marketplaces, Markets, and Market Design." American Economic Review 108, no. 7 (July 2018): 1609–1658.
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About The Author

Alvin E. Roth

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More from the Author
  • Kidney Exchange: An Operations Perspective By: Itai Ashlagi and Alvin E. Roth
  • Kidney Exchange: An Operations Perspective By: Itai Ashlagi and Alvin E. Roth
  • Minimizing Justified Envy in School Choice: The Design of New Orleans' OneApp By: Atila Abdulkadiroglu, Yeon-Koo Che, Parag A. Pathak, Alvin E. Roth and Oliver Tercieux
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