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Monopsony Wage Determination and Multiple Unemployment Equilibria in a Non-Linear Search Model

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  • Martin Chalkley

Abstract

This paper extends the analysis of wage determination in a search environment to the case where firms employ numerous individuals and benefit from team production. It is shown that monopsony wage offers may display perverse comparative statics properties. Interesting problems then arise concerning the uniqueness of search equilibria. These problems are addressed in a simple equilibrium setting where it is shown that multiple equilibria may exist, with an equilibrium that displays bootstrap properties. Our results suggest the possibility of explaining unsatisfactory equilibria as the consequence of profit-maximizing wage choices in environments with imperfectly coordinated trading.

Suggested Citation

  • Martin Chalkley, 1991. "Monopsony Wage Determination and Multiple Unemployment Equilibria in a Non-Linear Search Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(1), pages 181-193.
    • Handle: RePEc:oup:restud:v:58:y:1991:i:1:p:181-193.
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    File URL: http://hdl.handle.net/10.2307/2298054
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    Cited by:

    1. Eric Smith, 1999. "Search, Concave Production, and Optimal Firm Size," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(2), pages 456-471, April.
    2. Daniel Cardona & Fernando Sanchez Losada, 2003. "Union Power, Minimum Wage Legislation, Endogenous Labor Supplies and Production," Working Papers in Economics 105, Universitat de Barcelona. Espai de Recerca en Economia.
    3. Cahuc, P. & Saint-Martin, A. & Zylberberg, A., 2001. "The consequences of the minimum wage when other wages are bargained over," European Economic Review, Elsevier, vol. 45(2), pages 337-352, February.

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