Essays on Dynamic Markets

Abstract

This dissertation studies three markets. In chapter 1, we study a dynamic two-sided many-to-one matching model. We provide sufficient conditions for the existence of a dynamically stable matching and show that some but not all results for the college admissions problem can be generalized to our dynamic model. Without the sufficient conditions, we define regret-free dynamic stability, which allows agents to endogenously give up blocking powers. A regret-free dynamic stable matching always exists. In Chapter 2, we study airport slot allocation problems during severe weather. We assume airlines have lexicographic preferences and introduce a new mechanism, Multiple Trading Cycles (MTC), to allocate landing slots. In contrast to the currently used mechanism, MTC is individually rational, Pareto efficient, strategy-proof, non-manipulable by postponing a flight cancelation, and respects property rights over slots. In chapter 3, we develop a simple model of two intermediates competing for N suppliers, which is motivated by an observation from the fishing industry. Each intermediate receives a privately observed, i.i.d profit shock in each period. Intermediates use public observable, retroactive payments to entice suppliers to sell to them in the upcoming period. The competition can capture suppliers' responsiveness to the price difference and sensitivity to the sizes of price differences. When intermediates are not so patient, we prove that this model has a symmetric monotone pure strategy stationary Markov perfect Bayesian Equilibrium, in which an intermediate pays less when having a larger number of suppliers.