Unemployment and Product Market Competition in a Cournot Model with Efficiency Wage
AbstractThis paper analyzes the impact of product market competition on unemployment, wage and welfare in a model where unemployment is caused by efficiency wage considerations and oligopolistic firms compete in quantity. It is shown that while more intensive competition in product market increases output and reduces price, it does not necessarily lead to a lower unemployment rate or a higher wage for workers. Consequently, the relationship between the intensity of competition and the level of employment (respectively, wage, welfare) is not monotonic, and, in some instances, has an inverted-U shape.
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Bibliographic InfoPaper provided by Carleton University, Department of Economics in its series Carleton Economic Papers with number 10-04.
Length: 30 pages
Date of creation: 17 May 2010
Date of revision:
Publication status: Published: Carleton Economic Papers
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-05-29 (All new papers)
- NEP-BEC-2010-05-29 (Business Economics)
- NEP-LAB-2010-05-29 (Labour Economics)
- NEP-MIC-2010-05-29 (Microeconomics)
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