Simultaneous Search and Network Efficiency

Pieter Gautier and Christian Holzner

No 8522, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: When workers send applications to vacancies they create a network. Frictions arise if workers do not know where other workers apply to (this affects network creation) and firms do not know which candidates other firms consider (this affects network clearing). We show that those frictions and the wage mechanism are in general not independent. Equilibria that exhibit wage dispersion are inefficient in terms of network formation. Under complete recall (firms can go back and forth between all their candidates) only wage mechanisms that allow for ex post Bertrand competition generate the maximum matching on a realized network.

Keywords: Efficiency; Network clearing; Random bipartite network formation; Simultaneous search (search for similar items in EconPapers)
JEL-codes: D83 D85 E24 J64 (search for similar items in EconPapers)
Date: 2011-08
New Economics Papers: this item is included in nep-dge, nep-lab and nep-net
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Related works:
Working Paper: Simultaneous search and network efficiency (2013)
Working Paper: Simultaneous Search and Network Efficiency (2011)
Working Paper: Simultaneous Search and Network Efficiency (2011)
Working Paper: Simultaneous Search and Network Efficiency (2011)
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