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Simultaneous Search and Efficiency of Entry and Search Intensity

Pieter Gautier () and Christian L. Holzner

American Economic Journal: Microeconomics, 2017, vol. 9, issue 3, 245-82

Abstract: We consider a model where firms open vacancies and post and commit to a wage mechanism. Search is costly and workers simultaneously apply to multiple jobs. Firms can be connected to multiple workers and workers to multiple firms. We use a new method to derive the expected maximum number of matches in a large market as a function of the number of applications and market tightness. We also derive the conditions under which firm entry, worker participation, and search intensity are socially efficient. Finally, we show that a sequential auction under incomplete information can establish the social optimum and discuss some alternative mechanisms that can, under complete information of the entire network, also deliver social efficiency.

JEL-codes: D12 D44 D83 J23 J31 J64 M51 (search for similar items in EconPapers)
Date: 2017
Note: DOI: 10.1257/mic.20160088
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Handle: RePEc:aea:aejmic:v:9:y:2017:i:3:p:245-82