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On The Game‐Theoretic Foundations Of Competitive Search Equilibrium

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  • Manolis Galenianos
  • Philipp Kircher

Abstract

We provide a unified directed search framework with general production and matching specifications that encompass most of the existing literature. We prove the existence of subgame perfect Nash equilibria in pure firm strategies in a finite version of the model. We use this result to derive a more complete characterization of the equilibrium set for the finite economy and to extend convergence results as the economy becomes large to general production and matching specifications. The latter extends the microfoundations for the standard market utility assumption used in competitive search models with a continuum of agents to new environments.

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  • Manolis Galenianos & Philipp Kircher, 2012. "On The Game‐Theoretic Foundations Of Competitive Search Equilibrium," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(1), pages 1-21, February.
  • Handle: RePEc:wly:iecrev:v:53:y:2012:i:1:p:1-21
    DOI: j.1468-2354.2011.00669.x
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    Cited by:

    1. Leo Kaas & Philipp Kircher, 2015. "Efficient Firm Dynamics in a Frictional Labor Market," American Economic Review, American Economic Association, vol. 105(10), pages 3030-3060, October.
    2. Lester, Benjamin & Visschers, Ludo & Wolthoff, Ronald, 2015. "Meeting technologies and optimal trading mechanisms in competitive search markets," Journal of Economic Theory, Elsevier, vol. 155(C), pages 1-15.
    3. Gene M. Grossman & Elhanan Helpman & Philipp Kircher, 2013. "Matching and Sorting in a Global Economy," NBER Working Papers 19513, National Bureau of Economic Research, Inc.
    4. Allison, Blake A. & Bagh, Adib & Lepore, Jason J., 2022. "Invariant equilibria and classes of equivalent games," Games and Economic Behavior, Elsevier, vol. 132(C), pages 448-462.
    5. Kim, Jaehong & Camera, Gabriele, 2014. "Uniqueness of equilibrium in directed search models," Journal of Economic Theory, Elsevier, vol. 151(C), pages 248-267.
    6. James Albrecht & Xiaoming Cai & Pieter Gautier & Susan Vroman, 2021. "On the Foundations of Competitive Search Equilibrium with and without Market Makers," Working Papers gueconwpa~21-21-16, Georgetown University, Department of Economics.
    7. Manolis Galenianos & Philipp Kircher & Gábor Virág, 2011. "Market Power And Efficiency In A Search Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 85-103, February.
    8. Gomis-Porqueras, Pedro & Julien, Benoit & Chengsi, Wang, 2012. "Informative Advertising in Directed Search," MPRA Paper 38057, University Library of Munich, Germany.
    9. Matthew Doyle & Jacob Wong, 2013. "Wage Posting Without Full Commitment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 16(2), pages 231-252, April.
    10. Mangin, Sephorah, 2017. "A theory of production, matching, and distribution," Journal of Economic Theory, Elsevier, vol. 172(C), pages 376-409.
    11. Julien, Benoît & Roger, Guillaume, 2018. "Bidding for incentive contracts," Journal of Mathematical Economics, Elsevier, vol. 79(C), pages 95-105.
    12. Cemil Selcuk & Bilal Gokpinar, 2018. "Fixed vs. Flexible Pricing in a Competitive Market," Management Science, INFORMS, vol. 64(12), pages 5584-5598, December.
    13. Forand, Jean Guillaume, 2013. "Competing through information provision," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 438-451.
    14. Ioannis Kospentaris, 2021. "Unobserved Heterogeneity and Skill Loss in a Structural Model of Duration Dependence," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 280-303, January.
    15. Bi, Sheng & Langot, François, 2014. "Search and Retirement under Asymmetric Information," IZA Discussion Papers 8288, Institute of Labor Economics (IZA).
    16. Selcuk, Cemil & Gokpinar, Bilal, 2017. "Fixed vs. Flexible Pricing in a Competitive Market," Cardiff Economics Working Papers E2017/9, Cardiff University, Cardiff Business School, Economics Section.
    17. Mikhail Golosov & Pricila Maziero & Guido Menzio, 2013. "Taxation and Redistribution of Residual Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 121(6), pages 1160-1204.
    18. Benoit Julien & Asgerdur Petursdottir & Liang Wang, 2014. "Monetary Equilibria with Indivisible Goods," Working Papers 201428, University of Hawaii at Manoa, Department of Economics.
    19. Selcuk, Cemil, 2017. "Auctions vs. fixed pricing: Competing for budget constrained buyers," Games and Economic Behavior, Elsevier, vol. 103(C), pages 262-285.
    20. James Bland, Simon Loertscher, 2012. "Monotonicity, Non-Participation, and Directed Search Equilibria," Department of Economics - Working Papers Series 1147, The University of Melbourne.
    21. Nikhil Vellodi, 2018. "Ratings Design and Barriers to Entry," Working Papers 18-13, NET Institute.

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    More about this item

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs

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