American Economic Review Vol. 96 No. 3 2006

Matching and Price Competition

Jeremy Bulow¹; Jonathan Levin²

¹ Graduate School of Business, Stanford University, Stanford, CA 94305-5015. · ² Department of Economics, Stanford University, Stanford, CA, 94305-6072.

Abstract

We develop a model in which firms set impersonal 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. In light of our results, we discuss the performance of alternative institutions and the recent antitrust case against the National Resident Matching Program.

DOI

10.1257/aer.96.3.652

Volume

96

Issue

3

Pages

652-668

Language

en

Sources

crossref openalex bibtex:phds-export.bib bibtex:phds-export.bib

Cite

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