In conventional markets, supply and demand are matched by finding the market price that balances both sides. In contrast, matching markets are markets where buyers and sellers both have strong preferences and the allocation – i.e. who gets what – is not driven by price.
Thus, neither side can simply choose but also needs to be chosen, and non-monetary preferences clearly dominate the selection.
Applications of matching markets range from public policy issues such as the matching of doctors to hospitals, students to universities or children to kindergartens, and the optimisation of resource allocation processes in private business to the foundation of entire business models in the tech industry.