The Power of Recruiting the Smaller Side: Two Additional Traders Suffice in Two-Sided Markets
Yang Cai, Vineet Gupta, Yanchen Jiang, Christopher Liaw, Aranyak Mehta, Grigoris Velegkas, Di Wang, Mingfei Zhao
arxiv.org/abs/2609.27304 [𝚌𝚜.𝙶𝚃]
ALT We study Bulow-Klemperer-style competition complexity in two-sided double auctions with m unit-demand buyers drawn i.i.d. from F_B and n unit-supply sellers drawn i.i.d. from F_S. When m ≥ n and buyer valuations first-order stochastically dominate seller costs (F_B ≽_FSD F_S), we prove that recruiting just two additional sellers enables Seller Trade Reduction (STR), a prior-independent mechanism, to achieve expected Gains From Trade (GFT) at least the first-best GFT of the original market. When the buyer side is the smaller side of the market (m ≤ n), an analogous result holds for Buyer Trade Reduction with 2 additional buyers. This resolves open questions of Babaioff, Goldner, and Gonczarowski (SODA 2020) and Cai, Liaw, Mehta, and Zhao (STOC 2024). We complement our upper bound by showing that this uniform bound is optimal: already for m = n = 1, no prior-free mechanism (deterministic or randomized) that is dominant-strategy incentive-compatible, individually rational, and weakly budg