On Monopolistic Competition and Involuntary Unemployment
AbstractIn a simple temporary general equilibrium model, it is shown that, if the number of firms is small, imperfect price competition in the markets for goods may be responsible for the existence of unemployment at any given positive wage. In the authors' examples involving two firms facing their "true" demand curves, total monopolistic labor demand remains bounded as the wage rate goes to zero and unemployment prevails for a sufficiently large inelastic labor supply. In the competitive case, total labor demand would go to infinity and intersect labor supply at a positive wage. Copyright 1990, the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
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Bibliographic InfoArticle provided by MIT Press in its journal Quarterly Journal of Economics.
Volume (Year): 105 (1990)
Issue (Month): 4 (November)
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- d'ASPREMONT, Claude & DOS SANTOS FERREIRA, Rodolphe & GERARD-VARET, Louis-André, . "On monopolistic competition and involuntary unemployment," CORE Discussion Papers RP -909, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- d’ASPREMONT, C. & DOS SANTOS FERREIRA, R. & GERARD-VARET, L.-A., 1986. "On monopolistic competition and involuntary unemployment," CORE Discussion Papers 1986035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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