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Directed search with multi-vacancy firms

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  • Lester, Benjamin

Abstract

I construct a directed search model in which firms decide whether to enter a market and how many positions to create. Within this framework, the number of firms and the size of each firm are determined endogenously, wages play an allocative role in the matching process, and the frictions inherent in this process derive from the equilibrium behavior of workers and firms. I characterize the (unique) equilibrium. Comparative statics generate testable implications for cross-sectional variation in matching efficiency, as well as the dynamic behavior of vacancies and unemployment. Moreover, allowing for ex-ante heterogeneity across firms, the model can easily and naturally generate the observed relationship between firm size, wages, profitability, and hiring.

Suggested Citation

  • Lester, Benjamin, 2010. "Directed search with multi-vacancy firms," Journal of Economic Theory, Elsevier, vol. 145(6), pages 2108-2132, November.
    • Handle: RePEc:eee:jetheo:v:145:y:2010:i:6:p:2108-2132
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    Cited by:

    1. Leo Kaas & Philipp Kircher, 2015. "Efficient Firm Dynamics in a Frictional Labor Market," American Economic Review, American Economic Association, vol. 105(10), pages 3030-3060, October.
    2. Gomis-Porqueras Pedro & Julien Benoît & Wang Liang, 2018. "Competitive Search with Ex-post Opportunism," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 18(1), pages 1-17, January.
    3. Sílvio Rendon, 2025. "Testing for wage-specific search intensity," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 59(1), pages 1-19, December.
    4. Athanasios Geromichalos, 2015. "Unemployment Insurance and Optimal Taxation in a Search Model of the Labor Market," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 365-380, April.
    5. Athanasios Geromichalos, 2012. "Directed Search and the Bertrand Paradox," Working Papers 1221, University of California, Davis, Department of Economics.
    6. Cheremukhin, Anton A. & Restrepo-Echavarria, Paulina, 2014. "The labor wedge as a matching friction," European Economic Review, Elsevier, vol. 68(C), pages 71-92.
    7. Kaas Leo, 2010. "Variable Search Intensity with Coordination Unemployment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-33, October.
    8. Julien, Benoit & Kennes, John & Ritter, Moritz, 2018. "Bidding for teams," Labour Economics, Elsevier, vol. 52(C), pages 68-73.
    9. Li, Fei & Tian, Can, 2013. "Directed search and job rotation," Journal of Economic Theory, Elsevier, vol. 148(3), pages 1268-1281.
    10. Gomis-Porqueras, Pedro & Julien, Benoit & Chengsi, Wang, 2012. "Informative Advertising in Directed Search," MPRA Paper 38057, University Library of Munich, Germany.
    11. Godenhielm Mats & Kultti Klaus, 2015. "Directed Search with Endogenous Capacity," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 15(2), pages 211-249, July.
    12. Petrikaite, Vaiva & Hämäläinen, Saara, 2018. "Mobility with private information and privacy suppression," CEPR Discussion Papers 12860, C.E.P.R. Discussion Papers.
    13. Randall Wright & Philipp Kircher & Benoit Julîen & Veronica Guerrieri, 2017. "Directed Search: A Guided Tour," NBER Working Papers 23884, National Bureau of Economic Research, Inc.
    14. Geromichalos, Athanasios, 2012. "Directed search and optimal production," Journal of Economic Theory, Elsevier, vol. 147(6), pages 2303-2331.
    15. William Hawkins, 2015. "Bargaining with Commitment Between Workers and Large Firms," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(2), pages 350-364, April.
    16. Klaus Kultti & Eeva Mauring, 2014. "Low price signals high capacity," Journal of Economics, Springer, vol. 112(2), pages 165-181, June.
    17. Gabriele Camera & Cemil Selcuk, 2010. "Multi-player Bargaining with Endogenous Capacity," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 637-653, July.
    18. Athanasios Geromichalos, 2012. "Directed Search and the Bertrand Paradox," Working Papers 243, University of California, Davis, Department of Economics.
    19. Tan, Serene, 2022. "Income inequality and endogenous market structure under directed search," Journal of Economic Theory, Elsevier, vol. 201(C).
    20. Li, Fei & Tian, Can, 2011. "Directed search and job rotation," MPRA Paper 33875, University Library of Munich, Germany.
    21. Mats Godenhielm & Klaus Kultti, 2014. "Capacity Choice in a Large Market," PLOS ONE, Public Library of Science, vol. 9(8), pages 1-7, August.
    22. Kaas, Leo, 2008. "Variable Search Intensity in an Economy with Coordination Unemployment," IZA Discussion Papers 3697, Institute of Labor Economics (IZA).
    23. Ruslan Shavshin & Marina Sandomirskaia, 2024. "Pricing, Market Power, And Friction In A Finite Market: The Role Of Capacities," HSE Working papers WP BRP 267/EC/2024, National Research University Higher School of Economics.

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