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Ex post bidding and efficient coordination unemployment
Author(s) -
Julien Benoît,
Kennes John,
King Ian
Publication year - 2005
Publication title -
canadian journal of economics/revue canadienne d'économique
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.773
H-Index - 69
eISSN - 1540-5982
pISSN - 0008-4085
DOI - 10.1111/j.0008-4085.2005.00274.x
Subject(s) - bidding , matching (statistics) , unemployment , economics , microeconomics , coordination game , process (computing) , mathematical economics , computer science , mathematics , macroeconomics , statistics , operating system
. We study the implementation of constrained‐efficient allocations in labour markets where a basic coordination problem leads to an equilibrium matching friction. We argue that these allocations can be achieved in a non‐cooperative equilibrium if wages are determined by ex post bidding. This holds true even in finite‐sized markets where the equilibrium‐matching process has decreasing returns to scale – where the ‘Hosios rule’ does not apply – both with and without heterogeneity. JEL classification: D83, J64