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Labor market matching with ensuing competitive externalities in large economies

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  • Chen, Bo

Abstract

I formulate a model of a large private economy in which firms and managers form partnerships in an upstream labor (matching) market and then firm–manager pairs compete in a downstream goods market. I establish the existence and the general efficiency, in terms of social welfare, of stable matchings. However, stable matchings are not producer-optimal, in general, even in the cases when the feedback from the goods market does not affect agents’ preferences.

Suggested Citation

  • Chen, Bo, 2021. "Labor market matching with ensuing competitive externalities in large economies," Mathematical Social Sciences, Elsevier, vol. 109(C), pages 12-17.
    • Handle: RePEc:eee:matsoc:v:109:y:2021:i:c:p:12-17
    DOI: 10.1016/j.mathsocsci.2020.05.004
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    References listed on IDEAS

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    1. Sasaki, Hiroo & Toda, Manabu, 1996. "Two-Sided Matching Problems with Externalities," Journal of Economic Theory, Elsevier, vol. 70(1), pages 93-108, July.
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    8. Bo Chen, 2019. "Downstream competition and upstream labor market matching," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(4), pages 1055-1085, December.
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