According to the two-sided search model, in equilibrium the number of firms is
A) negatively related to the cost of posting a vacancy.
B) negatively related to the productivity of a match.
C) positively related to the level of employment insurance benefits.
D) positively related to the cost of posting a vacancy.
E) the firm's share of the total surplus from a match.

Question

Quizplus · Accepted Answer

In the two-sided search model, the number of firms is negatively related to the cost of posting a vacancy because higher costs discourage firms from entering the market and posting vacancies.

According to the Two-Sided Search Model, in Equilibrium the Number