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Simultaneous search and network efficiency

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  • Holzner, Christian
  • Gautier, Pieter

Abstract

When workers send applications to vacancies they create a bipartite network. Coordination frictions arise if workers and firms only observe their own links. We show that those frictions and the wage mechanism are in general not independent. Only wage mechanisms that allow for ex post competition generate the maximum matching on a realized network. We show that random search with ex post competition in wages leads to the maximum number of matches and is socially efficient in terms of vacancy creation, worker participation and the number of applications send out, if workers and not firms have the power to make offers.

Suggested Citation

  • Holzner, Christian & Gautier, Pieter, 2013. "Simultaneous search and network efficiency," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79740, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:79740
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    References listed on IDEAS

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    Cited by:

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    5. Kyungmin Kim & Philipp Kircher, 2013. "Efficient Competition through Cheap Talk: Competing Auctions and Competitive Search without Ex Ante Price Commitment," Edinburgh School of Economics Discussion Paper Series 235, Edinburgh School of Economics, University of Edinburgh.

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    More about this item

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D85 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Network Formation
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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