A Centralized or a Decentralized Labor Market?

I study a dynamic labor market with homogenous firms and workers. Both types of agents choose between a centralized market and a decentralized search market. Firms have free entry and exit. I consider how bargaining and wage posting in the two types of market affect the equilibrium outcome. For example, if there is bargaining in the centralized market and wage posting in the search market, there exists a centralized market equilibrium, a decentralized market equilibrium, and a mixed market equilibrium where there are agents in both submarkets. If wages are posted in both markets, a search market equilibrium does not exist

Coordination in the Labor Market

We solve the equilibrium market structure in a labor market where vacancies and unemployed workers can meet either in an intermediated market where wages are determined by take-it-orleave- it offers, or in a directed search market where firms post wages. By using an intermediary agents avoid the coordination problem which prevails in the search market. We study a monopolistic intermediary and perfect competition between intermediaries, and we consider the welfare properties of an intermediary institution, compared to an economy with an uncoordinated search process only.intermediary, matching, labor market

Wage Distribution with a Two-Sided Job Auction

wage distribution, job search, auctions

Bilateral C02 Trading

The market mechanisms built into the Kyoto Protocol have the potential of significantly reducing costs of limiting greenhouse gases. But if trading proceeds on a bilateral project-by-project basis rather than on a frictionless market, the total cost saving potential of trading is unclear. This paper provides the first attempt to explain market-level implications of bilateral CO2 trading by developing a many-polluter cap-and-trade model where bilateral trades are coordinated by a time-taking matching process. Bilateral trading entails frictions that alter the total number and the size of private trades, and the basic properties of the CO2 market as a transfer-mechanism. Perhaps surprisingly, frictions can also increase, not only decrease, the size of private trades. A calibration using previous cost estimates of CO2 reductions in the EU and economies in transition shows that frictions need not damage both sides of the market.

Wage Distribution with a Two-Sided Job Auction

We derive a wage distribution in a model where homogenous unemployed workers and homogenous vacancies can send or receive wage offers. We solve the mixed strategies for wage offers and for the fractions of vacancies and unemployed engaged in sending or receiving offers. The equilibrium market structure is evolutionarily stable, and the pricing game is utilitywise equivalent to auction where the number of competitors is known. We derive a non-degenerate wage distribution, the shape of which depends on the unemployment-vacancy ratio. For a ratio close to one, there exists a wage density function that is first increasing, in the end decreasing, and u-shaped in the middle. Key words: wage distribution, job search, auctions JEL codes: J64, J31, J41, D44 ∗We thank the participants in the Zeuthen workshop 2004 and in the RUESG labour workshop December 2004 for valuable comments. We also thank the Yrjö Jahnsson Foundation for financial support

A Cluster and a Search Market CanCoexist

I examine a rational expectations model of buyers and capacity con-strained sellers, where traders can choose between a cluster and a searchmarket. Sellers choose a market and post a price, and then buyerschoose which market to visit. There is a pure strategy equilibriumwhere all agents are in the cluster. There are also two continua ofmixed strategy equilibria. In a low-price equilibrium the cluster fea-tures overdemand, and in the high-price equilibrium the cluster fea-tures oversupply. The result differs sharply from a model where de-mand is stochastic and realizes after sellers have made their choices