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(Adverse Selection) Consider a labor market model with many identical firms hiring workers. The firms produce a homogeneous product with a constant-returns-to-scale technology and act

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(Adverse Selection) Consider a labor market model with many identical firms hiring workers. The firms produce a homogeneous product with a constant-returns-to-scale technology and act as price takers (we normalize the price of the product to 1). A worker, if hired by a firm, can produce e units of output, where 0 differs across workers and is distributed on 0, 0 , where 0

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