Search Theories of Markets <i>(Nobel Memorial Prize in Economics 2010)</i>

Abstract

The article reviews the search and matching methodology developed by Peter Diamond, Dale Mortensen, and Christopher Pissarides, who won the Nobel Prize in economics in 2010. The main focus is on the applications of this methodology to the analysis of labor market. The article shows the limitations of the Walrasian approach to modeling labor market, provides an example of a simplified stylized search model and discusses briefly the contribution of each laureate.