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The Segmentation-Thickness Tradeoff in Online Marketplaces

Publication ,  Journal Article
Alijani, R; Banerjee, S; Gollapudi, S; Kollias, K; Munagala, K
Published in: Proceedings of the ACM on Measurement and Analysis of Computing Systems
March 26, 2019

A core tension in the operations of online marketplaces is between segmentation (wherein platforms can increase revenue by segmenting the market into ever smaller sub-markets) and thickness (wherein the size of the sub-market affects the utility experienced by an agent). An important example of this is in dynamic online marketplaces, where buyers and sellers, in addition to preferences for different matches, also have finite patience (or deadlines) for being matched. We formalize this trade-off via a novel optimization problem that we term as 'Two-sided Facility Location': we consider a market wherein agents arrive at nodes embedded in an underlying metric space, where the distance between a buyer and seller captures the quality of the corresponding match. The platform posts prices and wages at the nodes, and opens a set of virtual clearinghouses where agents are routed for matching. To ensure high match-quality, the platform imposes a distance constraint between an agent and its clearinghouse; to ensure thickness, the platform requires the flow to any clearinghouse be at least a pre-specified lower bound. Subject to these constraints, the goal of the platform is to maximize the social surplus subject to weak budget balance, i.e., profit being non-negative. Our work characterizes the complexity of this problem by providing both hardness results as well as algorithms for this setting; in particular, we present an algorithm that for any constant ε > 0 yields a (1 + ε ) approximation for the gains from trade, while relaxing the match quality (i.e., maximum distance of any match) by a constant factor.

Duke Scholars

Published In

Proceedings of the ACM on Measurement and Analysis of Computing Systems

DOI

EISSN

2476-1249

Publication Date

March 26, 2019

Volume

3

Issue

1

Start / End Page

1 / 26

Publisher

Association for Computing Machinery (ACM)
 

Citation

APA
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MLA
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Alijani, R., Banerjee, S., Gollapudi, S., Kollias, K., & Munagala, K. (2019). The Segmentation-Thickness Tradeoff in Online Marketplaces. Proceedings of the ACM on Measurement and Analysis of Computing Systems, 3(1), 1–26. https://doi.org/10.1145/3322205.3311089
Alijani, Reza, Siddhartha Banerjee, Sreenivas Gollapudi, Kostas Kollias, and Kamesh Munagala. “The Segmentation-Thickness Tradeoff in Online Marketplaces.” Proceedings of the ACM on Measurement and Analysis of Computing Systems 3, no. 1 (March 26, 2019): 1–26. https://doi.org/10.1145/3322205.3311089.
Alijani R, Banerjee S, Gollapudi S, Kollias K, Munagala K. The Segmentation-Thickness Tradeoff in Online Marketplaces. Proceedings of the ACM on Measurement and Analysis of Computing Systems. 2019 Mar 26;3(1):1–26.
Alijani, Reza, et al. “The Segmentation-Thickness Tradeoff in Online Marketplaces.” Proceedings of the ACM on Measurement and Analysis of Computing Systems, vol. 3, no. 1, Association for Computing Machinery (ACM), Mar. 2019, pp. 1–26. Crossref, doi:10.1145/3322205.3311089.
Alijani R, Banerjee S, Gollapudi S, Kollias K, Munagala K. The Segmentation-Thickness Tradeoff in Online Marketplaces. Proceedings of the ACM on Measurement and Analysis of Computing Systems. Association for Computing Machinery (ACM); 2019 Mar 26;3(1):1–26.

Published In

Proceedings of the ACM on Measurement and Analysis of Computing Systems

DOI

EISSN

2476-1249

Publication Date

March 26, 2019

Volume

3

Issue

1

Start / End Page

1 / 26

Publisher

Association for Computing Machinery (ACM)