The Improvement Of Matching With Contract Theory On The Application Of Basin Market

In the recent decades,the matching with contract theory has been highly recognized in the field of market design.Under the framework of the theory,people reform the market with different characterization,design the matching algorithm and solve the inefficient and unstable problem of the market which exists for a long term.By now,one of the most valuable research fronts is how externalities will affect the matching.The scholars have some basic findings on the externalities of two-sided market.However,their research does not extend to the trading network model which is more common.In order to improve the matching with contract theory under the sight of trading network,we select the market of basin water as the object of our study.Firstly,according to our summary on the literature of the matching theory,we know that the key to extend the theory is analyzing the preference of the agent in the market.Then,we study several kinds of externalities and find out how the externality can change the preference.According to our study,the preference of the agents in the market is concave on the number of trading,while concavity is closely relevant to the substitutability of the matching theory.We define our matching model of the basin and formulize the preference of the agent and the solution of the model.Finally,we prove the existence of stable outcome in our model and show its Pareto efficiency.