Here we consider a matching model where agents are heterogeneous and utilities nontransferable. We utilize this framework to study how equilibrium sorting takes place in marriage markets. We impose conditions that guarantee the existence of a steady state equilibrium and then characterize it. Several examples are developed to illustrate the richness of equilibria. The model reveals an interesting sorting externality that can support multiple steady state equilibria, even with constant returns to matching.
ASJC Scopus subject areas
- Economics and Econometrics