We incorporate externalities into the stable matching theory of two-sided markets. Extending the classical substitutes … condition to markets with externalities, we establish that stable matchings exist when agent choices satisfy substitutability …. We show that substitutability is a necessary condition for the existence of a stable matching in a maximal-domain sense …

workers distributed between them. We introduce commuting costs and search-matching frictions to deal with the spatial mismatch …

workers distributed between them. We introduce commuting costs and search-matching frictions to deal with the spatial mismatch …

private competitive economy, firms and managers form partnerships in an upstream labor (matching) market and then firm … social welfare. Even though competitive externalities from the downstream goods market affect the preferences of agents in …

We incorporate externalities into the stable matching theory of two-sided markets. Extending the classical substitutes … condition to markets with externalities, we establish that stable matchings exist when agent choices satisfy substitutability …. We show that substitutability is a necessary condition for the existence of a stable matching in a maximal-domain sense …