Matching and Price Competition

33 Pages Posted: 8 Sep 2005

See all articles by Jeremy Bulow

Jeremy Bulow

Stanford University; National Bureau of Economic Research (NBER)

Jonathan Levin

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

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Date Written: August 2005

Abstract

We develop a model in which firms set impersonal salary levels before matching with workers.Salaries fall relative to any competitive equilibrium while profits rise by almost as much, implyinglittle inefficiency. Furthermore, the best firms gain the most from the system while wages becomecompressed. We discuss the performance of alternative institutions and the recent antitrust caseagainst the National Residency Matching Program in light of our results.

Suggested Citation

Bulow, Jeremy I. and Levin, Jonathan D., Matching and Price Competition (August 2005). NBER Working Paper No. w11506. Available at SSRN: https://ssrn.com/abstract=775996

Jeremy I. Bulow (Contact Author)

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Jonathan D. Levin

Stanford University - Department of Economics ( email )

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Stanford Graduate School of Business ( email )

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