Labor market matching with ensuing competitive externalities in large economies

Bo Chen

Mathematical Social Sciences, 2021, vol. 109, issue C, 12-17

Abstract: I formulate a model of a large private economy in which firms and managers form partnerships in an upstream labor (matching) market and then firm–manager pairs compete in a downstream goods market. I establish the existence and the general efficiency, in terms of social welfare, of stable matchings. However, stable matchings are not producer-optimal, in general, even in the cases when the feedback from the goods market does not affect agents’ preferences.

Keywords: Matching; Aggregate externalities; Fixed point; Efficiency; Spillover (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:109:y:2021:i:c:p:12-17

DOI: 10.1016/j.mathsocsci.2020.05.004

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