Matching and Price Competition
We develop a model in which firms set their salary levels before matching with workers. Wages fall relative to any competitive equilibrium while profits rise almost as much, implying little inefficiency. Furthermore, the best firms gain the most from the system while wages become compressed. We explore the performance of alternative institutions and discuss the recent antitrust case against the National Residency Matching Program in light of our results.
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- Christopher Avery & Christine Jolls & Richard Posner & Alvin E. Roth, 2007.
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1818, Stanford University, Graduate School of Business.
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Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(1), pages 33-53, February.
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