This paper describes a simple framework for evaluating the allocative performance of economies characterized by trading frictions and unemployment. This framework integrates the normative results of earlier Diamond-Mortensen-Pissarides bilateral matching-bargaining models of trade coordination...

A dynamic trading problem is examined in which a monopsonistic employer hires workers with private information. The employer chooses between two mutually exclusive outcomes. In the mar ket outcome, the employer offers long-term contracts and information is conveyed entirely through...