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Competitive markets with private information on both sides
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Meier, Martin, Minelli, Enrico and Polemarchakis, H. M. (2014) Competitive markets with private information on both sides. Economic Theory, Volume 55 (Number 2). pp. 257-280. doi:10.1007/s00199-013-0754-2 ISSN 0938-2259.
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Official URL: http://dx.doi.org/10.1007/s00199-013-0754-2
Abstract
We consider competitive markets with asymmetric information. We define a notion of equilibrium that allows individuals to act strategically both as buyers and as sellers. In an example, the wage is common to all types of labor, and it does not reveal information concerning the skill levels of workers. However, at the solution we propose, an informed firm can take advantage of its superior information: it can choose the extent to which it concentrates its employment offers to workers of different types. The probabilities that offers to workers of different types produce a hire are treated parametrically by firms who have correct expectations about them, and firms forego the wage when they extend an offer whether the offer is successful or not. In a general framework, we prove that equilibria exist.
Item Type: | Journal Article | ||||||
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Divisions: | Faculty of Social Sciences > Economics | ||||||
Journal or Publication Title: | Economic Theory | ||||||
Publisher: | Springer | ||||||
ISSN: | 0938-2259 | ||||||
Official Date: | February 2014 | ||||||
Dates: |
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Volume: | Volume 55 | ||||||
Number: | Number 2 | ||||||
Page Range: | pp. 257-280 | ||||||
DOI: | 10.1007/s00199-013-0754-2 | ||||||
Status: | Peer Reviewed | ||||||
Publication Status: | Published | ||||||
Access rights to Published version: | Restricted or Subscription Access |
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