Heterogeneous firms and cost sharing in China's marketplaces

This study extends Melitz's model with heterogeneous firms by introducing shared fixed costs in a marketplace. It aims to explain heterogeneous firms' choice between traditional marketplaces and modern distribution channels on the basis of their productivities. The results reveal that the co-existence of a traditional marketplace and modern distribution channels improves social welfare. In addition, a deregulation policy for firm entry outside a marketplace and accumulation of human capital are factors that contribute to improve the social welfare.

Heterogenous match efficiency

In this paper, we show a model with one-sided endogenous match efficiency. It is assumed that schooling can enhance match efficiency, and people will choose the schooling level optimally to balance its costs and benefits of enhanced match efficiency. Assuming a financial market imperfection which limits individuals to borrow, we showed that, in equilibrium, when educational achievements can be characterised by dicohotomy (secondary vs. tertiary), tertiary education gives higher wages even it only has pure match efficiency (signalling) value with no human capital value. We also showed that relative match efficiency vis-a-vis its mean matters in wage levels.