Simultaneous Search with Heterogeneous Firms and Ex Post Competition
Tinbergen Institute Discussion Paper No. 06-032/3
37 Pages Posted: 5 Apr 2006
There are 2 versions of this paper
Simultaneous Search with Heterogeneous Firms and Ex Post Competition
Simultaneous Search with Heterogeneous Firms and Ex Post Competition
Date Written: March 2006
Abstract
We study a search model where workers can send multiple applications to high and low productivity firms. Firms that compete for the same candidate can increase their wage offers as often as they like. We show that there is a unique equilibrium where workers mix between sending both applications to the high and both to the low productivity sector. Efficiency requires however that they apply to both sectors because then the coordination frictions are lowest. For many configurations, the equilibrium outcomes are the same under directed and random search. Allowing for free entry creates a second source of inefficiency.
Keywords: directed search, efficiency, coordination frictions
JEL Classification: D83, E24, J23, J24, J64
Suggested Citation: Suggested Citation
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