Competitive Investments and Matching: Hedonic Pricing Problems

Seungjin Han

Department of Economics Working Papers from McMaster University

Abstract: The rational expectations equilibrium in this paper endogenizes the worker's characteristic decision and the rm's decisions on wage and job amenity in a large matching economy where the worker's matching benefits may depend in an arbitrary fashion on the worker's characteristic, wage, and job amenity. This paper provides the sufficient condition for the unique rational expectations equilibrium and shows step by step how to derive job amenities, workers' characteristics, and wages in equilibrium. The results suggest that the estimates of compensating wage di erentials from the hedonic model would be biased even if the worker's characteristic and job amenity were fully observable.

Keywords: investments; matching; hedonic prices (search for similar items in EconPapers)
JEL-codes: C78 D51 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2005-04
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Persistent link: https://EconPapers.repec.org/RePEc:mcm:deptwp:2005-08

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