How Bargaining in Marriage Drives Marriage Market Equilibrium

Abstract

This paper investigates marriage market equilibrium when bargaining in marriage (BIM) determines allocation within marriage. In contrast, the standard marriage market model assumes that prospective spouses make binding agreements in the marriage market (BAMM) that determine allocation within marriage. When BIM determines allocation within marriage, the appropriate framework for analyzing marriage market equilibrium is the Gale-Shapley matching model, not the Koopmans-Beckmann-Shapley-Shubik assignment model. BIM and BAMM have different implications not only for allocation within marriage but also for who marries, who marries whom, the number of marriages, and the Pareto efficiency of marriage market equilibrium.