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Matching and price competition: beyond symmetric linear costs

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Abstract

Bulow and Levin’s (2006) “Matching and Price Competition” studies a matching model in which hospitals compete for interns by offering wages. We relax the assumption of symmetric linear costs and compare the pricing equilibrium that results to the firm-optimal competitive equilibrium. With linear and asymmetric costs, competition in the pricing equilibrium may not be localized, but all other qualitative comparisons of Bulow and Levin (2006) hold. With non-linear and symmetric costs workers’ average utility in the pricing equilibrium may be higher than in the firm- optimal competitive equilibrium. With asymmetric and non-linear costs, firms need not choose scores from an interval in a pricing equilibrium, which may make competition even less localized.

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Correspondence to Ron Siegel.

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González-Díaz, J., Siegel, R. Matching and price competition: beyond symmetric linear costs. Int J Game Theory 42, 835–844 (2013). https://doi.org/10.1007/s00182-012-0325-y

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  • DOI: https://doi.org/10.1007/s00182-012-0325-y

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