Can Job Competition Prevent Hold-Ups?
AbstractWe 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we035120.
Date of creation: Dec 2003
Date of revision:
Other versions of this item:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-01-18 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Michael Peters, 1997.
"Surplus Extraction and Competition,"
peters-97-02, University of Toronto, Department of Economics.
- Benoit Julien & John Kennes & Ian King, 2000.
"Bidding for Labor,"
Review of Economic Dynamics,
Elsevier for the Society for Economic Dynamics, vol. 3(4), pages 619-649, October.
- Felli, Leonardo & Roberts, Kevin W S, 2002.
"Does Competition Solve the Hold-up Problem?,"
CEPR Discussion Papers
3535, C.E.P.R. Discussion Papers.
- Leonardo Felli & Kevin Roberts, 2001. "Does Competition Solve the Hold-up Problem?," STICERD - Theoretical Economics Paper Series 414, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Leonardo Felli & Kevin Roberts, 2000. "Does Competition Solve the Hold-up Problem?," Econometric Society World Congress 2000 Contributed Papers 1714, Econometric Society.
- Leonardo Felli & Kevin Roberts, . "Does Competition Solve the Hold-up Problem?," CARESS Working Papres 00-04, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Leonardo Felli & Kevin Roberts, 2011. "Does Competition Solve the Hold-up Problem?," STICERD - Theoretical Economics Paper Series /2011/561, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
- Leonardo Felli & Kevin Roberts, . "Does Competition Solve the Hold-up Problem?," Penn CARESS Working Papers 4a7d448e61f494c5472087aed, Penn Economics Department.
- Kevin Roberts & Leonardo Felli, 2000. "Does Competition Solve the Hold-up Problem?," Economics Series Working Papers 2000-W11, University of Oxford, Department of Economics.
- Leonardo Felli & Kevin Roberts, 2000. "Does Competition Solve the Hold-Up Problem?," CESifo Working Paper Series 317, CESifo Group Munich.
- Felli, L. & Roberts, K., 2000. "Does Competition Solve the Hold-Up Problem?," Economics Papers 2000-w11, Economics Group, Nuffield College, University of Oxford.
- Daron Acemoglu & Robert Shimer, 1998.
"Holdups and Efficiency with Search Frictions,"
98-14, Massachusetts Institute of Technology (MIT), Department of Economics.
- Harold L. Cole & George J. Mailath & Andrew Postlewaite, .
""Efficient Non-Contractible Investments'',"
CARESS Working Papres
98-13, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
- Harold L. Cole & George J. Mailath & Andrew Postlewaite, . "Efficient Non-Contractible Investments," Penn CARESS Working Papers 08d6793d32cab8f6e1f46dac0, Penn Economics Department.
- Harold L. Cole & George J. Mailath & Andrew Postlewaite, 1998. "Efficient non-contractible investments," Staff Report 253, Federal Reserve Bank of Minneapolis.
- Mortensen, Dale T, 1982. "Property Rights and Efficiency in Mating, Racing, and Related Games," American Economic Review, American Economic Association, vol. 72(5), pages 968-79, December.
- Laing, Derek & Palivos, Theodore & Wang, Ping, 1995. "Learning, Matching and Growth," Review of Economic Studies, Wiley Blackwell, vol. 62(1), pages 115-29, January.
- Peters, Michael, 1997.
"A Competitive Distribution of Auctions,"
Review of Economic Studies,
Wiley Blackwell, vol. 64(1), pages 97-123, January.
- Moen, E.R., 1995.
"Competitive Search Equilibrium,"
37/1995, Oslo University, Department of Economics.
- Kenneth Burdett & Shouyong Shi & Randall Wright, 2001. "Pricing and Matching with Frictions," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 1060-1085, October.
- Masters, Adrian M, 1998. "Efficiency of Investment in Human and Physical Capital in a Model of Bilateral Search and Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 477-94, May.
- Pissarides, Christopher A, 1984. "Search Intensity, Job Advertising, and Efficiency," Journal of Labor Economics, University of Chicago Press, vol. 2(1), pages 128-43, January.
- MacLeod, W Bentley & Malcomson, James M, 1993. "Investments, Holdup, and the Form of Market Contracts," American Economic Review, American Economic Association, vol. 83(4), pages 811-37, September.
- Kultti, K.K., 1997.
"Equivalence of Auctions and Posted Prices,"
1997-57, Tilburg University, Center for Economic Research.
- Hosios, Arthur J, 1990. "On the Efficiency of Matching and Related Models of Search and Unemployment," Review of Economic Studies, Wiley Blackwell, vol. 57(2), pages 279-98, April.
- McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
- Moen, E.R., 1996. "Human Capital Investments and Market Imperfections," Memorandum 08/1996, Oslo University, Department of Economics.
- Moen, Espen R, 1999. "Education, Ranking, and Competition for Jobs," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages 694-723, October.
- Steven J. Davis, 2001. "The Quality Distribution of Jobs and the Structure of Wages in Search Equilibrium," NBER Working Papers 8434, National Bureau of Economic Research, Inc.
- repec:wop:humbsf:2000-72 is not listed on IDEAS
- Acemoglu, Daron, 1996. "A Microfoundation for Social Increasing Returns in Human Capital Accumulation," The Quarterly Journal of Economics, MIT Press, vol. 111(3), pages 779-804, August.
- Conley, John P. & Neilson, William, 2009. "Endogenous games and equilibrium adoption of social norms and ethical constraints," Games and Economic Behavior, Elsevier, vol. 66(2), pages 761-774, July.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.