Goods-market competition and profit sharing: a multisector macro approach
AbstractThis paper develops a theoretical model that relates the degree of goods-market competition with the extent of profit sharing. The authors multisector framework indicates that increased competition in goods markets leads to an increased weighting on firm profits in an optimally indexed contract. Consequently, our model predicts that a rising extent of profit-sharing arrangements in actual U.S. contracts should accompany an increase in the degree of goods-market competition. Available, but limited, data on profit sharing in the United States is generally consistent with this fundamental implication of the model.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Dallas in its series Working Papers with number 9709.
Date of creation: 1997
Date of revision:
Other versions of this item:
- Duca, John V. & VanHoose, David D., 1998. "Goods-market competition and profit sharing: a multisector macro approach," Journal of Economics and Business, Elsevier, vol. 50(6), pages 525-534, November.
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