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Minimum wages for Ronald McDonald monopsonies : a theory of monopsonistic competition by V Bhaskar and Ted To - a comment

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  • Frank Walsh

Abstract

Bhaskar and To (1999) develop a model of monopsonistic competition and solve explicitly for equilibrium. While a minimum wage set just above the unconstrained optimum leads firms to increase employment it also causes firm exit as profits fall. In this note I show that the employment and welfare effects of the minimum wage which Bhaskar and To had thought to be ambiguous when firm exit was accounted for are in fact unambiguously positive.

Suggested Citation

  • Frank Walsh, 2001. "Minimum wages for Ronald McDonald monopsonies : a theory of monopsonistic competition by V Bhaskar and Ted To - a comment," Working Papers 200118, School of Economics, University College Dublin.
    • Handle: RePEc:ucn:wpaper:200118
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    File URL: http://hdl.handle.net/10197/930
    File Function: First version, 2001
    Download Restriction: no
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    More about this item

    Keywords

    Monopsony; Minimum wage; Employment; Monopsonies; Minimum wage;
    All these keywords.

    JEL classification:

    • J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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