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Competitive markets with private information on both sides

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  • Martin Meier

    ()

  • Enrico Minelli

    ()

  • Herakles Polemarchakis

    ()

Abstract

We consider competitive markets with asymmetric information. We define a notion of equilibrium that allows individuals to act strategically both as buyers and as sellers. In an example, the wage is common to all types of labor, and it does not reveal information concerning the skill levels of workers. However, at the solution we propose, an informed firm can take advantage of its superior information: it can choose the extent to which it concentrates its employment offers to workers of different types. The probabilities that offers to workers of different types produce a hire are treated parametrically by firms who have correct expectations about them, and firms forego the wage when they extend an offer whether the offer is successful or not. In a general framework, we prove that equilibria exist. Copyright Springer-Verlag Berlin Heidelberg 2014

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Bibliographic Info

Article provided by Springer in its journal Economic Theory.

Volume (Year): 55 (2014)
Issue (Month): 2 (February)
Pages: 257-280

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Handle: RePEc:spr:joecth:v:55:y:2014:i:2:p:257-280

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Keywords: Competitive markets; Asymmetric information; Large games; D50; D52; D82;

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Cited by:
  1. Mario Cassetti, 2010. "Macroeconomic outcomes of changing bargaining relationships in open economies. The feasibility of a wage-led economy reconsidered," Working Papers, University of Brescia, Department of Economics 1004, University of Brescia, Department of Economics.
  2. A. Fedele & A. Mantovani & F. Liucci, 2010. "Credit availability in the crisis: which role for the European Investment Bank Group?," Working Papers 699, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Francesca Barion & Raffaele Miniaci & Paolo M Panteghini & Maria Laura Parisi, 2010. "Profit shifting by debt financing in Europe," Working Papers, University of Brescia, Department of Economics 1007, University of Brescia, Department of Economics.
  4. Del Boca Alessandra & Fratianni Michele & Spinelli Franco & Trecroci Carmine, 2012. "Macroeconomic Instability and the Phillips Curve in Italy," Economia politica, Società editrice il Mulino, issue 1, pages 19-44.
  5. A. Fedele & A. Mantovani, 2010. "The Importance of Being Consulted," Working Papers 712, Dipartimento Scienze Economiche, Universita' di Bologna.
  6. Correia-da-Silva, João, 2012. "General equilibrium in markets for lemons," Journal of Mathematical Economics, Elsevier, vol. 48(3), pages 187-195.

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