Can job competition prevent hold-ups?

Marcel Jansen

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We consider an economy in which firms need to invest in capital before they can advertise a job, while applicants may have to compete for jobs. Our aim to investigate how this competition affects the investment decisions of firms. Our first finding shows that the economy always generates the right number of jobs. However, with random search firms under-invest in capital. In contrast, if workers can direct their search towards firms with different capital levels, the equilibrium is efficient. This result contrasts sharply with the predictions of models with ex post wage bargaining that never yield an efficien allocation. Moreover, our results extend the efficiency of auction mechanisms to an environment with non-contractible investments.

Date: 2003-12
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://e-archivo.uc3m.es/rest/api/core/bitstreams ... e7aa45a1fb21/content (application/pdf)

Related works:
Working Paper: Can Job Competition Prevent Hold-Ups? (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we035120

Access Statistics for this paper

More papers in UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía
Bibliographic data for series maintained by Ana Poveda ().