Matching and Price Competition

Stanford University Research Paper No. 1818

39 Pages Posted: 6 Oct 2003

See all articles by Jeremy Bulow

Jeremy Bulow

Stanford University; National Bureau of Economic Research (NBER)

Jonathan Levin

Stanford Graduate School of Business; Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

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Date Written: July 2003

Abstract

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.

Suggested Citation

Bulow, Jeremy I. and Levin, Jonathan D., Matching and Price Competition (July 2003). Stanford University Research Paper No. 1818, Available at SSRN: https://ssrn.com/abstract=441006 or http://dx.doi.org/10.2139/ssrn.441006

Jeremy I. Bulow (Contact Author)

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Jonathan D. Levin

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