NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Estimating Matching Games with Transfers

Jeremy T. Fox

NBER Working Paper No. 14382
Issued in October 2008
NBER Program(s):   IO

Economists wish to use data on matches to learn about the structural primitives that govern sorting. I show how to use equilibrium data on who matches with whom for semiparametric estimation of match production functions in many-to-many, two-sided matching games with transferable utility. Inequalities derived from equilibrium necessary conditions underlie a maximum score estimator of match production functions. The inequalities do not require data on transfers, quotas, production levels, or unmatched agents. The estimator does not suffer from a computational or data curse of dimensionality in the number of agents in a matching market, as the estimator avoids solving for an equilibrium and estimating first-stage match probabilities. I present an empirical application to automotive suppliers and assemblers.

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This paper was revised on December 5, 2011

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Document Object Identifier (DOI): 10.3386/w14382

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