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An Alternative Approach to Search Frictions

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  • Ricardo Lagos

Abstract

This paper illustrates an alternative approach to modeling search frictions. Frictions are not assumed to exist, but are shown to arise endogenously as a distinctive feature of the set of equilibria that correspond to a particular range of parameter values. The model's spatial structure and the agents' moving decisions are explicitly spelled out, allowing the number of contacts that occur to depend on the way agents choose to locate themselves. An aggregate matching function is shown to exist, and its behavior with respect to changes in parameters such as distances between locations, the agents' payoffs, and the sizes of the populations of searchers on each side of the market is completely characterized.

Suggested Citation

  • Ricardo Lagos, 2000. "An Alternative Approach to Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 108(5), pages 851-873, October.
    • Handle: RePEc:ucp:jpolec:v:108:y:2000:i:5:p:851-873
    DOI: 10.1086/317674
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    References listed on IDEAS

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    1. Pissarides, C A, 1979. "Job Matchings with State Employment Agencies and Random Search," Economic Journal, Royal Economic Society, vol. 89(356), pages 818-833, December.
    2. Sumner J. La Croix & James Mak & Walter Miklius, 1991. "Evaluation of Alternative Arrangements for the Provision of Airport Taxi Service," Working Papers 199110, University of Hawaii at Manoa, Department of Economics.
    3. Giuseppe Bertola & Ricardo J. Caballero, 1994. "Cross-Sectional Efficiency and Labour Hoarding in a Matching Model of Unemployment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 61(3), pages 435-456.
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