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Bidding for teams

Author

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  • Julien, Benoit
  • Kennes, John
  • Ritter, Moritz

Abstract

We develop a simple competing job auction model to study wages and employment within teams. If synergies favor larger teams, the basic competing job auction model predicts that workers are generally paid a wage less than their marginal product of labor and that there is too much entry of firms. We then extend the model to allow for workplace competition. In this case, the firms can also compete by a commitment to job amenities and a minimum scale of operation. We then find that wages are always equal to the marginal product of labor and entry of firms is efficient.

Suggested Citation

  • Julien, Benoit & Kennes, John & Ritter, Moritz, 2018. "Bidding for teams," Labour Economics, Elsevier, vol. 52(C), pages 68-73.
    • Handle: RePEc:eee:labeco:v:52:y:2018:i:c:p:68-73
    DOI: 10.1016/j.labeco.2018.04.001
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    More about this item

    Keywords

    Competing auctions; Directed search; Team production;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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