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General Equilibrium Wage and Price Distributions

James Albrecht¹; Bo Axell²; Harald Lang²

¹ University of California, Irvine · ² Research Institute of Industrial Economics

This paper extends models of search market equilibrium to incorporate general-equilibrium considerations. The model we treat is one with a single product market and a single labor market. An equilibrium distribution of prices and wages is the result of optimal price- and wage-setting behavior by firms in conjunction with optimal search by individuals. We prove the existence of a degenerate equilibrium and of a two-point dispersion equilibrium.

DOI

10.2307/1884174

Volume

101 (4)

Pages

687

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