Multiple applications, competing mechanisms, and market power

James Albrecht, Xiaoming Cai, Pieter Gautier and Susan Vroman

Journal of Economic Theory, 2020, vol. 190, issue C

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 the firm's candidate. When the contract space includes application fees, there exists a continuum of symmetric equilibria of which only one is efficient, and it has a posted wage equal to match output. In the inefficient equilibria, the wage is below match output, and the value of a worker's application depends on whether he or she receives another offer. This allows individual firms to free ride on one another and gives firms market power. When we endogenize the number of applications and allow for general mechanisms, only the efficient equilibrium survives. By allowing for general mechanisms, we are able to examine the sources of inefficiency in the multiple applications literature.

Keywords: Multiple applications; Directed search; Competing mechanisms; Efficiency; Market power (search for similar items in EconPapers)
JEL-codes: C78 D44 D83 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0022053120301149
Full text for ScienceDirect subscribers only

Related works:
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)
Working Paper: Multiple Applications, Competing Mechanisms, and Market Power (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:190:y:2020:i:c:s0022053120301149

DOI: 10.1016/j.jet.2020.105121

Access Statistics for this article

Journal of Economic Theory is currently edited by A. Lizzeri and K. Shell

More articles in Journal of Economic Theory from Elsevier
Bibliographic data for series maintained by Catherine Liu ().