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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. Alessandro Fedele & Andrea Mantovani, 2010. "The importance of being consulted," Working Papers 1010, University of Brescia, Department of Economics.
  2. Alessandra Del Boca & Michele Fratianni & Franco Spinelli & Carmine Trecroci, 2010. "Macroeconomic instability and the Phillips curve in Italy," Working Papers 1013, University of Brescia, Department of Economics.
  3. Francesca Barion & Raffaele Miniaci & Paolo Panteghini & Maria Laura Parisi, 2010. "Profit Shifting by Debt Financing in Europe," CESifo Working Paper Series 2985, CESifo Group Munich.
  4. Alessandro Fedele & Andrea Mantovani & Francesco Liucci, 2010. "Credit Availability in the crisis: which role for the European Investment Bank Group?," Working Papers 1005, University of Brescia, Department of Economics.
  5. Correia-da-Silva, João, 2012. "General equilibrium in markets for lemons," Journal of Mathematical Economics, Elsevier, vol. 48(3), pages 187-195.
  6. Mario Cassetti, 2010. "Macroeconomic outcomes of changing bargaining relationships in open economies. The feasibility of a wage-led economy reconsidered," Working Papers 1004, University of Brescia, Department of Economics.

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