We develop an equilibrium directed search model of the labor market where workers can simultaneously apply for multiple jobs. Our main theoretical contribution is to integrate the portfolio choice problem faced by workers into an equilibrium framework.All equilibria of our model exhibit wage dispersion. Consistent with stylized facts, the density of wages is decreasing and higher wage firms receive more applications per vacancy. Unlike most models of directed search, the equilibria are not constrained efficient.

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A search-theoretic model of the retail market for illegal drugs is developed. Trade occurs in bilateral, potentially long-lived matches between sellers and buyers. Buyers incur search costs when experimenting with a new seller. Moral hazard is present because buyers learn purity only after a trade is made. The model produces testable implications regarding the distribution of purity offered in equilibrium, and the duration of the relationships between buyers and sellers. These predictions are consistent with available data. The effectiveness of different enforcement strategies is evaluated, including some novel ones which leverage the moral hazard present in the market.

We provide a unified directed search framework with general production and matching specifications that encompasses most of the existing literature. We prove the existence of subgame perfect Nash equilibria in pure firm strategies in a finite version of the model.We use this result to derive a more complete characterization of the equilibrium set for the finite economy and to extend convergence results as the economy becomes large to general production and matching specifications. The latter extends the micro-foundations for the standard market-utility assumption used in competitive search models with a continuum of agents to new environments.