Multiple Applications, Competing Mechanisms, and Market Power

James Albrecht, Xiaoming Cai (), Pieter Gautier and Susan Vroman
Additional contact information
Xiaoming Cai: Peking University

No 12512, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We consider a labor market with search frictions in which workers make multiple applications and firms can post and commit to general mechanisms that may be conditioned both on the number of applications received and on the number of offers received by its candidate. When the contract space includes application fees, there exists a continuum of equilibria of which only one is socially efficient. In the inefficient equilibria, firms have market power that arises from the fact that the value of a worker’s application portfolio depends on what other firms offer, which allows individual firms to free ride and offer workers less than their marginal contribution. Finally, by allowing for general mechanisms, we are able to examine the sources of inefficiency in the multiple applications literature.

Keywords: competing mechanisms; directed search; multiple applications; efficiency; market power (search for similar items in EconPapers)
JEL-codes: C78 D44 D83 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2019-07
New Economics Papers: this item is included in nep-com, nep-cta and nep-des
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published - published in: Journal of Economic Theory, 2020, 190, 105121

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Related works:
Journal Article: Multiple applications, competing mechanisms, and market power (2020)
Working Paper: Multiple Applications, Competing Mechanisms, and Market Power (2019)
Working Paper: Multiple Applications, Competing Mechanisms, and Market Power (2019)
Working Paper: Multiple Applications, Competing Mechanisms, and Market Power (2019)
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