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A Model of Duopolistic Unionism Exhibiting Downward Wage Rigidity

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  • Dan Kovenock
  • Kealoha Widdows
  • James B. Dworkin

Abstract

This paper presents a simple model of sequential wage setting by two unions, each of which is attached to a firm in a duopolistic output market. The authors find that, for a large range of unanticipated downward demand shocks, the equilibrium exhibits downward wage rigidity. Neither union chooses to alter its wage even though wages are flexible. This occurs despite the reduction in employment accompanying these shocks.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 24 (1991)
Issue (Month): 1 (February)
Pages: 55-69

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Handle: RePEc:cje:issued:v:24:y:1991:i:1:p:55-69

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Cited by:
  1. Kovenock, D. & Widdows, K., 1991. "Price Leadership and Asymmetric Price Rigidity," Purdue University Economics Working Papers 1008, Purdue University, Department of Economics.
  2. Dennis A.V. Dittrich, 2004. "Wages, Length of Relationship and Bargaining Power: An experimental study in a world of complete contracts," Papers on Strategic Interaction 2004-18, Max Planck Institute of Economics, Strategic Interaction Group.

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