The Mortensen Rule and Efficient Coordination Unemployment

John Kennes (), Benoit Julien () and Ian King ()

Macroeconomics from EconWPA

Abstract: We study the implementation of constrained-efficient allocations in labour markets where a basic coordination problem leads to an equilibrium matching function. We argue that these allocations can be achieved in equilibrium if wages are determined by ex post bidding. This holds true even in finite sized markets where the equilibrium matching function has decreasing returns to scale – where the “Hosios rule” does not apply – both with and without heterogeneity. This wage determination mechanism is similar to the one proposed by Mortensen (1982) in a different setting

Keywords: Hosios Rule; coordination unemployment; price-posting; auctions; efficiency; directed search (search for similar items in EconPapers)
JEL-codes: D43 D44 D45 D83 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dge and nep-lab
Date: 2002-06-08
Note: Type of Document - pdf; pages: 27. Also posted on website: www.johnkennes.dk
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Journal Article: The Mortensen rule and efficient coordination unemployment (2006)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0206001

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