Long-run Equilibrium under Pure Monopsony
AbstractThis note extends the conventional short-run comparison of perfectly competitive and monopsony markets to show that the long-run monopsony equilibrium implies a greater divergence from the competitive results than is true in the short run. The conditions necessary to have a "pure" monopsony, with power in only the labor market, are developed and generate a constant marginal revenue product of labor equal to the competitive wage. This leads the monopsonist to cut wages and labor inputs further in the long run and also forms the upper bound on the bargaining range for a union negotiating with a pure monopsonist.
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Bibliographic InfoArticle provided by Canadian Economics Association in its journal Canadian Journal of Economics.
Volume (Year): 23 (1990)
Issue (Month): 3 (August)
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- Boris Hirsch & Marion König & Joachim Möller, 2009.
"Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap,"
083, Bavarian Graduate Program in Economics (BGPE).
- Boris Hirsch & Marion König & Joachim Möller, 2013. "Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(4), pages 412-439, 09.
- Hirsch, Boris & König, Marion & Möller, Joachim, 2009. "Is There a Gap in the Gap? Regional Differences in the Gender Pay Gap," IZA Discussion Papers 4231, Institute for the Study of Labor (IZA).
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