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    An Invitation to Market Design
    19 Sep 2017Working Paper Summaries

    An Invitation to Market Design

    by Scott Duke Kominers, Alexander Teytelboym, and Vincent P. Crawford
    Effective market design can improve liquidity, efficiency, and equity in markets. This paper illustrates best practices in market design through three examples: the design of medical residency matching programs, a scrip system to allocate food donations to food banks, and the recent “Incentive Auction” that reallocated wireless spectrum from television broadcasters to telecoms.
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    Author Abstract

    Market design seeks to translate economic theory and analysis into practical solutions to real-world problems. By redesigning both the rules that guide market transactions and the infrastructure that enables those transactions to take place, market designers can address a broad range of market failures. In this paper, we illustrate the process and power of market design through three examples: the design of medical residency matching programs, a scrip system to allocate food donations to food banks, and the recent “Incentive Auction” that reallocated wireless spectrum from television broadcasters to telecoms. Our lead examples show how effective market design can encourage participation, reduce gaming, and aggregate information, in order to improve liquidity, efficiency, and equity in markets. We also discuss a number of fruitful applications of market design in other areas of economic and public policy.


    Paper Information

    • Full Working Paper Text
    • Working Paper Publication Date: September 2017
    • HBS Working Paper Number: HBS Working Paper #18-019
    • Faculty Unit(s): Entrepreneurial Management
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    Scott Duke Kominers
    Scott Duke Kominers
    Professor of Business Administration (Leave of Absence)
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