The Mortensen Rule and Efficient Coordination Unemployment
AbstractWe study the implementation of constrained-efficient allocations in labour markets where a basic coordination problem leads to an equilibrium matching function. We argue that these allocations can be achieved in equilibrium if wages are determined by ex post bidding. This holds true even in finite sized markets where the equilibrium matching function has decreasing returns to scale – where the “Hosios rule” does not apply – both with and without heterogeneity. This wage determination mechanism is similar to the one proposed by Mortensen (1982) in a different setting
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0206001.
Length: 27 pages
Date of creation: 08 Jun 2002
Date of revision:
Note: Type of Document - pdf; pages: 27. Also posted on website: www.johnkennes.dk
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Hosios Rule; coordination unemployment; price-posting; auctions; efficiency; directed search;
Other versions of this item:
- Julien, Benoit & Kennes, John & King, Ian, 2006. "The Mortensen rule and efficient coordination unemployment," Economics Letters, Elsevier, vol. 90(2), pages 149-155, February.
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
This paper has been announced in the following NEP Reports:
- NEP-ALL-2002-07-31 (All new papers)
- NEP-DGE-2002-07-31 (Dynamic General Equilibrium)
- NEP-LAB-2002-07-31 (Labour Economics)
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