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The unreasonable effectiveness of optimal transport in economics

  • Paper
  • Jul 9, 2021
  • #Economics
Alfred Galichon
@AlfredGalichon
(Author)
arxiv.org
Read on arxiv.org
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1 Mention
Optimal transport has become part of the standard quantitative economics toolbox. It is the framework of choice to describe models of matching with transfers, but beyond that, it al... Show More

Optimal transport has become part of the standard quantitative economics toolbox. It is the framework of choice to describe models of matching with transfers, but beyond that, it allows to: extend quantile regression; identify discrete choice models; provide new algorithms for computing the random coefficient logit model; and generalize the gravity model in trade. This paper offer a brief review of the basics of the theory, its applications to economics, and some extensions.

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Lukas Freund @_lukasfreund_ ยท Jan 9, 2022
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Fantastic overview paper "The unreasonable effectiveness of optimal transport in economics" (@AlfredGalichon), covering the basics and many applications, as well as providing some deeper points of interpretation in the conclusion (see excerpt).
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