Dynamic Games and Growth Cycles in Unionised Economies
AbstractIn this paper we integrate the dynamic models formulated by the microeconomic theory of trade unions and the differential games approach. We demonstrate that the results of the dynamic monopoly union model, elaborated by Kidd and Oswald (1987) and Jones and McKenna (1994), can be obtained as solutions of a Stackelberg differential game between firms and unions under particular assumptions on unionâ€™s membership dynamic. We also develop a Nash differential game whose solutions imply a cycle in wage share of product and employment rate which resembles Goodwinâ€™s (1967) cyclical growth path. This result is obtained by use of the Hopf theorem on local bifurcations, under particular hypotheses on the membership dynamics.
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Bibliographic InfoPaper provided by University of Rome La Sapienza, Department of Public Economics in its series Working Papers with number 32.
Date of creation: Oct 1998
Date of revision:
Trade unions; nonlinear dynamics; differential games; cyclical growth.;
Find related papers by JEL classification:
- C00 - Mathematical and Quantitative Methods - - General - - - General
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
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- Jones, Stephen R G & McKenna, C J, 1994. "A Dynamic Model of Union Membership and Employment," Economica, London School of Economics and Political Science, vol. 61(242), pages 179-89, May.
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- Paz Espinosa, Maria & Rhee, Changyong, 1989. "Efficient Wage Bargaining as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 565-88, August.
- Marchetti Enrico, 1998. "Cooperative and Noncooperative Differential Games between Firms and Trade Unions," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 223-242.
- Gottfries, Nils & Horn, Henrik, 1987. "Wage Formation and the Persistence of Unemployment," Economic Journal, Royal Economic Society, vol. 97(388), pages 877-84, December.
- Bruno CHIARINI, 1997. "A Dynamic Union Model with Pensioners Membership," Rivista Italiana degli Economisti, SIE - Societa' Italiana degli Economisti (I), vol. 2(2), pages 147-162, August.
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