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Local stability constraints

Author

Listed:
  • Esteban Peralta

    (University of Michigan)

Abstract

This note revisits the well-known class of one-to-one, frictionless labor-matching markets with perfect transferable utilities and heterogeneous agents. It is shown that when the surplus is increasing and exhibits increasing differences, stability can be characterized by the absence of local blocks; namely, blocks involving a firm and a worker that is matched to a firm with an attribute that is either the same or adjacent to that of the blocking firm. A similar result holds when the surplus is decreasing and exhibits decreasing differences, illustrating that these assumptions not only guarantee assortativeness with respect to agents’ attributes, but also the redundancy of global stability constraints.

Suggested Citation

  • Esteban Peralta, 2022. "Local stability constraints," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 10(2), pages 273-281, October.
    • Handle: RePEc:spr:etbull:v:10:y:2022:i:2:d:10.1007_s40505-022-00232-4
    DOI: 10.1007/s40505-022-00232-4
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    References listed on IDEAS

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    More about this item

    Keywords

    Local blocks; Modularity; Stability; Surplus;
    All these keywords.

    JEL classification:

    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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