Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2019-08-01
Number: 19-054/VI
Author-Name: James Albrecht
Author-Workplace-Name: Georgetown University
Author-Name: Xiaoming Cai
Author-Workplace-Name: Tongji University
Author-Name: Pieter A. Gautier
Author-Workplace-Name: Vrije Universiteit Amsterdam
Author-Name: Susan Vroman
Author-Workplace-Name: Georgetown University
Title: Multiple Applications, Competing Mechanisms, and Market Power
Abstract: We consider a labor market with search frictions in which workers make multiple applications and firms can post and commit to general mechanisms that may be conditioned both on the number of applications received and on the number of offers received by its candidate. When the contract space includes application fees, there exists a continuum of equilibria of which only one is socially efficient. In the inefficient equilibria, firms have market power that arises from the fact that the value of a worker's application portfolio depends on what other firms offer, which allows individual firms to free ride and offer workers less than their marginal contribution. Finally, by allowing for general mechanisms, we are able to examine the sources of inefficiency in the multiple applications literature.
Classification-JEL: C78, D44, D83
Keywords: multiple applications, directed search, competing mechanisms, efficiency, market power
File-URL: https://papers.tinbergen.nl/19054.pdf
File-Format: application/pdf
File-Size: 760498 bytes
Handle: RePEc:tin:wpaper:20190054