Efficiency of thin and thick markets

Li Gan () and Qi Li

Journal of Econometrics, 2016, vol. 192, issue 1, 40-54

Abstract: In this paper, we propose a matching model to study the efficiency of thin and thick markets. Our model shows that the probabilities of matches in a thin market are significantly lower than those in a thick market. When applying our results to a job search model, it implies that, if the ratio of job candidates to job openings remains (roughly) a constant, the probability that a person can find a job is higher in a thick market than in a thin market. We apply our matching model to the U.S. academic market for new PhD economists. Consistent with the prediction of our model, a field of specialization with more job openings and more candidates has a higher probability of matching.

Keywords: Thin and thick market; Matching function; Microfoundation; Market efficiency; Empirical application (search for similar items in EconPapers)
JEL-codes: J4 J6 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Working Paper: Efficiency of Thin and Thick Markets (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:econom:v:192:y:2016:i:1:p:40-54

DOI: 10.1016/j.jeconom.2015.10.012

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