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Author Info
Kenneth Burdett
Randall Wright

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Abstract

We integrate search theory into an equilibrium framework in a new way and argue that the result is a simple but powerful tool for understanding many issues related to bilateral matching. We assume for much of what we do that utility is less than perfectly transferable. This turns out to generate multiple equilibria that do not arise in a standard model, with transferable utility, unless one adds increasing returns. We also provide simple conditions for uniqueness that apply to models with or without transferable utility or increasing returns. Examples, applications, and extensions are discussed.

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Publisher Info
Paper provided by Federal Reserve Bank of Minneapolis in its series Staff Report with number 169.

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Date of creation: 1994
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Handle: RePEc:fip:fedmsr:169

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Keywords: Econometric models ; Labor market;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Albrecht, James W & Axell, Bo, 1984. "An Equilibrium Model of Search Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(5), pages 824-40, October. [Downloadable!] (restricted)
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  2. Mortensen, Dale T., 1994. "The cyclical behavior of job and worker flows," Journal of Economic Dynamics and Control, Elsevier, vol. 18(6), pages 1121-1142, November. [Downloadable!] (restricted)
  3. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January. [Downloadable!] (restricted)
  4. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
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  5. Diamond, Peter A, 1982. "Aggregate Demand Management in Search Equilibrium," Journal of Political Economy, University of Chicago Press, vol. 90(5), pages 881-94, October. [Downloadable!] (restricted)
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  6. Masters, Adrian M, 1999. "Wage Posting in Two-Sided Search and the Minimum Wage," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(4), pages 809-26, November.
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  7. Melvyn Cole & Randall Wright, . "A Dynamic Equilibrium Model of Search, Bargaining, and Money," CARESS Working Papres 97-9, University of Pennsylvania Center for Analytic Research and Economics in the Social Sciences.
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  8. Kiyotaki, Nobuhiro & Wright, Randall, 1993. "A Search-Theoretic Approach to Monetary Economics," American Economic Review, American Economic Association, vol. 83(1), pages 63-77, March. [Downloadable!] (restricted)
  9. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer. [Downloadable!] (restricted)
  10. Howitt, Peter, 1988. "Business Cycles with Costly Search and Recruiting," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 147-65, February. [Downloadable!] (restricted)
  11. Diamond, Peter A, 1982. "Wage Determination and Efficiency in Search Equilibrium," Review of Economic Studies, Blackwell Publishing, vol. 49(2), pages 217-27, April. [Downloadable!] (restricted)
  12. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-90, October. [Downloadable!] (restricted)
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  13. Diamond, Peter A., 1971. "A model of price adjustment," Journal of Economic Theory, Elsevier, vol. 3(2), pages 156-168, June. [Downloadable!] (restricted)
  14. Diamond, Peter A, 1981. "Mobility Costs, Frictional Unemployment, and Efficiency," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 798-812, August. [Downloadable!] (restricted)
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  15. Burdett, Kenneth & Judd, Kenneth L, 1983. "Equilibrium Price Dispersion," Econometrica, Econometric Society, vol. 51(4), pages 955-69, July. [Downloadable!] (restricted)
  16. Howitt, Peter & McAfee, R Preston, 1987. "Costly Search and Recruiting," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(1), pages 89-107, February. [Downloadable!] (restricted)
  17. Rubinstein, Ariel & Wolinsky, Asher, 1985. "Equilibrium in a Market with Sequential Bargaining," Econometrica, Econometric Society, vol. 53(5), pages 1133-50, September. [Downloadable!] (restricted)
  18. Trejos, Alberto & Wright, Randall, 1995. "Search, Bargaining, Money, and Prices," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 118-41, February. [Downloadable!] (restricted)
  19. Howitt, Peter & McAfee, R Preston, 1992. "Animal Spirits," American Economic Review, American Economic Association, vol. 82(3), pages 493-507, June. [Downloadable!] (restricted)
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  20. Kiyotaki, Nobuhiro & Wright, Randall, 1991. "A contribution to the pure theory of money," Journal of Economic Theory, Elsevier, vol. 53(2), pages 215-235, April. [Downloadable!] (restricted)
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  21. Dale Mortensen, 1984. "Job Search and Labor Market Analysis," Discussion Papers 594, Northwestern University, Center for Mathematical Studies in Economics and Management Science. [Downloadable!]
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  22. Olivier Jean Blanchard & Peter A. Diamond, 1991. "The Aggregate Matching Function," NBER Working Papers 3175, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  23. Butters, Gerard R, 1977. "Equilibrium Distributions of Sales and Advertising Prices," Review of Economic Studies, Blackwell Publishing, vol. 44(3), pages 465-91, October. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Steve Bradley & MJ Andrews & R Upward, 1999. "Estimating the probability of a match using micro-economic data for the youth labour market," Working Papers 000001, Lancaster University Management School, Economics Department. [Downloadable!]
    Other versions:
  2. Markova Kseniya & Roshchin Sergey, . "Choice among Different Job Search Channels. The Evidence from Russian Labor Market," EERC Working Paper Series 04-05e, EERC Research Network, Russia and CIS. [Downloadable!]
  3. Hector Chade & Gustavo Ventura, . "Income Taxation and Marital Decisions," Working Papers 2133479, Department of Economics, W. P. Carey School of Business, Arizona State University. [Downloadable!]
    Other versions:
  4. Martyn Andrews & Steve Bradley & Richard Upward, 2006. "Testing theories of labour market matching," The School of Economics Discussion Paper Series 0630, Economics, The University of Manchester. [Downloadable!]
    Other versions:
  5. Russo, Giovanni & Gorter, Cees & Schettkat, Ronald, 1997. "Searching, ranking and hiring," Serie Research Memoranda 0017, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics. [Downloadable!]
  6. Ramya Sundaram, 2000. "Multiple Traits in the Marriage Market: Does Diversity Sometimes Win?," Econometric Society World Congress 2000 Contributed Papers 1666, Econometric Society. [Downloadable!]
  7. Robert M. Hunt, 2007. "Matching externalities and inventive productivity," Working Papers 07-7, Federal Reserve Bank of Philadelphia. [Downloadable!]
  8. Nicolas L. Jacquet & Serene Tan, 2007. "On the Segmentation of Markets," Working Papers 18-2007, Singapore Management University, School of Economics. [Downloadable!]
  9. Damien Gaumont & Martin Schindler & Randall Wright, 2005. "Alternative Theories of Wage Dispersion," PIER Working Paper Archive 05-017, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania. [Downloadable!]
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  10. Shouyong Shi, 2002. "Frictional Assignment, Part II: Infinite Horizon and Inequality," Working Papers shouyong-02-01, University of Toronto, Department of Economics. [Downloadable!]
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  11. Byeongju Jeong, 2003. "The Welfare Effects of Mobility Restrictions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 6(3), pages 685-696, July. [Downloadable!] (restricted)
  12. Postel-Vinay, Fabien & Robin, Jean-Marc, 2002. "Equilibrium Wage Dispersion with Worker and Employer Heterogeneity," CEPR Discussion Papers 3548, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  13. Thomas Tröger & Georg Nöldeke, 2009. "Matching Heterogeneous Agents with a Linear Search Technology," Bonn Econ Discussion Papers bgse1_2009, University of Bonn, Germany. [Downloadable!]
  14. Héctor Chade & Gustavo Ventura, 2001. "Taxes and Marriage: A Two-Sided Search Analysis," Working Papers 36, Universidad de San Andres, Departamento de Economia, revised Aug 2001. [Downloadable!]
  15. Postel Vinay Fabien & Robin Jean Marc, 2000. "Wage Dispersion with Heterogeneous Firm Technologies and Worker Abilities: An Equilibrium Job Search Model for Matched Employer-Employee Data," Research Unit Working Papers 0008, Laboratoire d'Economie Appliquee, INRA. [Downloadable!]
  16. Hector Chade & Gustavo Ventura, . "Taxes and Marriage: A Two-Sided Search Analysis," Working Papers 2132862, Department of Economics, W. P. Carey School of Business, Arizona State University. [Downloadable!]
    Other versions:
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