In the two-sided search model, Nash Bargaining implies
A)the firm and the worker receive a constant share of the surplus from a match.
B)the firm and the worker reduce the total surplus to zero.
C)the firm receives the total surplus from a match.
D)the worker receives the total surplus from a match.
E)the firm receives an increasing share of the surplus and the worker a decreasing share.

Question

Quizplus · Accepted Answer

Nash Bargaining implies that the firm and the worker receive a constant share of the surplus from a match. This means that the distribution of surplus is agreed upon by both parties and remains constant regardless of changes in the labor market or bargaining power of either side.

In the Two-Sided Search Model, Nash Bargaining Implies