Matching and Price Competition
Stanford University; National Bureau of Economic Research (NBER)
Stanford University - Department of Economics; National Bureau of Economic Research (NBER)
Stanford University Research Paper No. 1818
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.
Number of Pages in PDF File: 39working papers series
Date posted: October 6, 2003
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