IDEAS home Printed from https://ideas.repec.org/a/oup/restud/v87y2020i3p1134-1173..html
   My bibliography  Save this article

Competing Teams

Author

Listed:
  • Hector Chade
  • Jan Eeckhout

Abstract

In many economic applications of matching, the teams that form compete later in market structures with strategic interactions or with knowledge spillovers. Such post-match competition introduces externalities at the matching stage: a team's payoff depends not only on their members' attributes but also on those of other matched teams. This article develops a large market model of matching with externalities, in which first teams form, and then they compete. We analyse the sorting patterns that ensue under competitive equilibrium as well as their efficiency properties. Our main results show that insights substantially differ from those of the standard model without externalities: there can be multiple competitive equilibria with different sorting patterns; both optimal and competitive equilibrium matching can involve randomization; and competitive equilibrium can be inefficient with a matching that can drastically deviate from the optimal one. We also shed light on the economic relevance of our matching model with externalities. We analyse two economic applications that illustrate how our model can rationalize the trend in within- and between-firm inequality, and also the evolution of markups of sectors where firms have market power.

Suggested Citation

  • Hector Chade & Jan Eeckhout, 2020. "Competing Teams," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 87(3), pages 1134-1173.
    • Handle: RePEc:oup:restud:v:87:y:2020:i:3:p:1134-1173.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/restud/rdz022
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Schetter, Ulrich & Tejada, Oriol, 2018. "Globalization and the Concentration of Talent," VfS Annual Conference 2018 (Freiburg, Breisgau): Digital Economy 181562, Verein für Socialpolitik / German Economic Association.
    2. Hideo Konishi & Chen-Yu Pan & Dimitar Simeonov, 2023. "Formation of Teams in Contests: Tradeoffs Between Inter and Intra-Team Inequalities," Boston College Working Papers in Economics 1061, Boston College Department of Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:restud:v:87:y:2020:i:3:p:1134-1173.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://academic.oup.com/restud .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.