Essays on bargaining, search and matching

Chapter 1 explores conditions under which economic agents will want to bargain collectively instead of individually with a common third party. I use an N-person sequential bargaining model of a production economy to analyze this question. Previous work has shown that agents prefer to bargain collectively if they are substitutes for each other in production. This result, however, depends on an exogenously fixed bargaining procedure. I allow the bargaining procedure to be determined endogenously and investigate how incentives vary with transaction costs and heterogeneity. The previous results are not robust even when agents are substitutes. In particular, agents prefer bargaining individually if they are heterogeneous and sufficiently patient. With transaction costs, substitutability is no longer the sole determinant of collectivization. Rather, the degree of heterogeneity, in conjunction with the degree of substitutability determine the incentives for collective action.; Chapter 2 analyzes a decentralized search and matching economy comprised of heterogeneous agents. It explores whether Becker's assortative matching result generalizes to an economy with costly search. This chapter looks at a model with discounting or additive search costs. A general proof of equilibrium existence for arbitrary search costs is given and sufficient conditions for assortative matching are outlined. The existence result encompasses the frictionless model. Assortative matching is no longer ensured by complementarities in production. Surprisingly when search is costless, complementarities are not sufficient for assortative matching. However, when the set of types of agents is finite, perfect assortative matching is the unique equilibrium of the frictionless model.; Chapter 3 analyzes a search economy where the steady state distribution is maintained through an exogenous inflow of new agents. As in Chapter 2, complementarities are not sufficient for assortative matching. This failure is shown to hold for a wide variety of production functions. However, perfect assortative matching is the unique equilibrium when the number of types is finite or countable.; Chapter 4 of this dissertation explores sufficient conditions for a continuous optimal policy and a concave value function in dynamic programming. Also, the chapter addresses conditions needed for the differentiability of the value function.