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Structure, behavior, and market power in an evolutionary labor market with adaptive search

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  • Tesfatsion, Leigh

Abstract

This study uses an agent-based computational labor market framework to experimentally study the relationship between job capacity, job concentration, and market power. Job capacity is measured by the ratio of potential job openings to potential work offers, and job concentration is measured by the ratio of work suppliers to employers. For each experimental treatment, work suppliers and employers repeatedly seek preferred worksite partners based on continually updated expected utility, engage in efficiency-wage worksite interactions modelled as prisoner's dilemma games, and evolve their worksite behaviors over time. The main finding is that job capacity consistently trumps job concentration when it comes to predicting the relative ability of work suppliers and employers to exercise market power.

Suggested Citation

  • Tesfatsion, Leigh, 2001. "Structure, behavior, and market power in an evolutionary labor market with adaptive search," ISU General Staff Papers 200101010800001049, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:200101010800001049
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    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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