The Mortensen rule and efficient coordination unemployment
Julien, Benoît; Kennes, John; King, Ian
We apply the efficiency axioms of Mortensen (1982) to a set of matching games involving coordination frictions between buyers. These games include markets with .finite numbers of buyers and sellers and markets with infinite numbers of heterogenous buyers and homogenous sellers. We show that the Mortensen rule, but not the Hosios rule, gives constrained efficient allocations. We also show that the Mortensen rule is implemented by a simple auction.
Publisher: University of Otago
Series number: 525
Research Type: Discussion Paper