An Examination of the Inapplicability of Monetary Payments in Establishing Equilibrium in Matching Markets: Analyzing Supply and Demand Balance

Matching markets constitute a distinct market structure in which the balance between supply and demand cannot be achieved through traditional monetary payment mechanisms. This paper, through a literature review, explores the limitations of monetary payments in matching markets, including ethical and legal constraints, the non-quantifiability of preferences, insufficient market thickness and liquidity, and issues of fairness. Findings indicate that the realization of supply and demand balance in matching markets relies on non-monetary mechanism designs, such as stable matching algorithms. This study offers a new perspective for understanding the operational mechanisms of matching markets and offers theoretical support for related policy designs.