Labor- and Product-Market Structure and Excess Labor
AbstractThis study analyzes under what labor- and product-market structures a firm may hire more labor than needed to produce its profit maximizing output. Three labor-market structures are studied: (1) decentralized (firm-specific unions), (2) one-sided centralization (central union and several firms), and (3) centralized (central union and employers' association). Excess labor is explained by the risk-sharing motive that in the model exists between the risk-averse workers and the risk-neutral firm owner. Labor may be excessively hired in any of the labor-market structures and under a wide range of product-market structures; duopoly, oligopoly etc.
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Bibliographic InfoPaper provided by Stockholm School of Economics in its series Working Paper Series in Economics and Finance with number 249.
Length: 19 pages
Date of creation: 31 Aug 1998
Date of revision:
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Efficient wage bargaining; centralization; market power; technical efficiency.;
Find related papers by JEL classification:
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
This paper has been announced in the following NEP Reports:
- NEP-ALL-1998-09-07 (All new papers)
- NEP-LTV-1998-09-07 (Unemployment, Inequality & Poverty)
- NEP-MIC-1998-09-07 (Microeconomics)
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