TY - JOUR
T1 - Incomplete mechanisms and efficient allocation in labour markets
AU - Gale, Douglas
N1 - Funding Information:
Then we can show the existence of an equilibrium dominating (1. g, M, w) in the same way as in Theorem 4, because the markets m that are not less than mohave not been disturbed. II Acknowledgement. EarlierversionsofthispaperwerepresentedattheMidwestMathematicalEconomics Meetings and at the University of Pennsylvania as well as the Conference on the Mechanism Design Approach to Macroeconomics held in Santander, Spain in June, 1989. I am grateful to the many participants for their comments and especially to Ramon Marimon. Two anonymous referees gave very helpful comments on an earlier draft. The research support of the NSF under grants SES 8546351 and SES 8720589 is gratefully acknowledged.
PY - 1991/10
Y1 - 1991/10
N2 - Efficiency is analyzed in a Walrasian model of labour markets with adverse selection. Workers are distinguished by productivity and preferences; firms are distinguished by productivity and ability to distinguish workers. An equilibrium is defined to be constrained efficient if it cannot be dominated by an incomplete mechanism (IM). The set of equilibria turns out to have an interesting structure. Within the class of strongly monotonic economies, there exists at least one efficient equilibrium. Under slightly stronger conditions, an equilibrium is dominated by an IM only if it can be dominated by another equilibrium, that is, equilibria are Pareto-ranked.
AB - Efficiency is analyzed in a Walrasian model of labour markets with adverse selection. Workers are distinguished by productivity and preferences; firms are distinguished by productivity and ability to distinguish workers. An equilibrium is defined to be constrained efficient if it cannot be dominated by an incomplete mechanism (IM). The set of equilibria turns out to have an interesting structure. Within the class of strongly monotonic economies, there exists at least one efficient equilibrium. Under slightly stronger conditions, an equilibrium is dominated by an IM only if it can be dominated by another equilibrium, that is, equilibria are Pareto-ranked.
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U2 - 10.2307/2297940
DO - 10.2307/2297940
M3 - Article
AN - SCOPUS:0001025666
SN - 0034-6527
VL - 58
SP - 823
EP - 851
JO - Review of Economic Studies
JF - Review of Economic Studies
IS - 5
ER -