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Isha Chittari: Class B Roll 1939

Matching markets attempts to describe the formation of mutually beneficial relationships over time by matching supply and demand. An example is the Uber transportation service app, which matches drivers and riders. It controls supply and demand by raising prices when demand is higher to incentivize one rider to book, equalizing supply and demand. Uber also offers a carpool option at lower prices but with the compromise of sharing the ride. Matching markets ensures an efficient process that satisfies both buyers and sellers in a mutually beneficial way, and such markets are essential to manage supply and demand in today's large, service-based economy.

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Anil K Luniya
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68 views

Isha Chittari: Class B Roll 1939

Matching markets attempts to describe the formation of mutually beneficial relationships over time by matching supply and demand. An example is the Uber transportation service app, which matches drivers and riders. It controls supply and demand by raising prices when demand is higher to incentivize one rider to book, equalizing supply and demand. Uber also offers a carpool option at lower prices but with the compromise of sharing the ride. Matching markets ensures an efficient process that satisfies both buyers and sellers in a mutually beneficial way, and such markets are essential to manage supply and demand in today's large, service-based economy.

Uploaded by

Anil K Luniya
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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#A1011939

Isha Chittari
CLASS B ROLL 1939
MATCHING MARKETS
In economic terms, matching markets also known as matching theory,
is a mathematical framework attempting to describe the formation of
mutually beneficial relationships over time. What this basically means
is that matching markets is an attempt to match supply and demand.
With the help of our constantly evolving technology we have been
able to build various apps that make it easy for us to match markets.
An example of matching markets is a transportation service called
Uber. What this app essentially does is, it supplies a certain number of
drivers in each area and waits until a person who needs a ride opens
the app and requests for a vehicle. Not only does it do that, it also
controls the supply and demand for this service.
Let’s take an example of Person A, Person B and Person C (where- A
and B are both customers and C is the Uber driver). Supposing, A and
B both people need to go to a certain destinations and they open their
apps from their respective locations, they will see how many drivers
are available in their area and how far they are. In this example we
assume that the only driver available is driver C. So, in the current
situation, demand is higher than supply. In this case, the Uber
application raises its price in order to see who is willing to pay more
in order to reach their destination. Depending on who deems their
situation as more urgent, they will book the Uber and pay the higher
price for their journey. This way the market is controlled and demand
is equal to supply. Uber takes this small example and executes it in a
large scale.
Another option available in Uber is the carpool option which allows
you to pay a much lower price for your journey with the compromise
that the vehicle will be shared with other consumers and the ride may
take longer. It may not be the most convenient journey for the
customer but he/she is allowed to choose his priorities and decide
whether or not he/she wants a comfortable ride or a cheap ride.
This application is incredibly profitable not only to the consumers and
drivers themselves but also to the organization. It has enabled
efficient transportation at convenient costs.
This is exactly what market matching is. It is not only supply and
demand it is also who is being supplies what and at what cost. It is a
process through which both parties- the seller and the buyer receive
satisfaction of their needs and wants in a way that is mutually
beneficial.
Without matching of markets the our currently modernized economy
would completely crash. With the size of our population today and the
variety of services being offered to us, it is incredibly essential to be
able to manage those factors in order to get into a system that meets
our requirements while also benefiting all the parties involved.

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