Entry and Unemployment in a Union-Oligopoly Model
AbstractIt is commonly acknowledged that a larger number of trade unions is associated with a higher level of employment. We demonstrate that this belief can be wrong, i.e. that the entry of trade unions can increase the number of unemployed workers. This result is stated in a multi-sector economy in which Cournotian trade unions incur no cost and have a nominal objective function. It is obtained when the labour demand function is sufficiently convex such that the trade unions' actions become strong strategic complements. In addition, we show that this counterintuitive result is consistent with a wide range of parameter values under a CES technology.
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Bibliographic InfoPaper provided by Centre for Research into Industry, Enterprise, Finance and the Firm in its series CRIEFF Discussion Papers with number 9904.
Date of creation: Oct 1999
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Find related papers by JEL classification:
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
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