This study undertakes a systematic experimental investigation of the relationship between market power and labor market structure (concentration and capacity conditions) when workers and employers preferentially match based on past worksite experiences. For each tested market structure, workers and employers repeatedly seek preferred worksite partners based on continually updated expected utility, engage in efficiency-wage worksite interactions modeled as prisoner's dilemma games, and evolve their worksite behaviors over time. A key finding is the presence of strong learning and network effects. Each tested market structure maps into a "spectral" distribution of observed interaction networks exhibiting one dominant attractor (frequent network pattern) with one or two weaker attractors (less frequent network patterns). Market structure is strongly predictive for the relative market power of workers and employers across all network attractors, but the magnitudes of the market power levels attained by workers and employers vary widely across the network attractors. Annotated pointers to related work can be accessed here: http://www.econ.iastate.edu/tesfatsi/tnghome.htm
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
1914.
Length: Date of creation: 05 Dec 2000 Date of revision: Publication status: Published in Journal of Economic Dynamics and Control, March 2001, Vol. 25, No. Nos. 3-4, pp. 419-457. Handle: RePEc:isu:genres:1914
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Find related papers by JEL classification: B4 - Schools of Economic Thought and Methodology - - Economic Methodology C0 - Mathematical and Quantitative Methods - - General C6 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games J2 - Labor and Demographic Economics - - Demand and Supply of Labor J6 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies
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