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Union objectives and indexation externalities in a monopolistically competitive economy

  • James, Jonathan G.
  • Lawler, Phillip
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    This paper extends the literature on indexation externalities by analyzing equilibrium and efficient indexation in a unionized economy characterized by a monopolistically competitive goods market. The assumption that union objectives relate to both employment and the real wage implies that union indexation decisions are associated with a negative externality and, as a consequence, the equilibrium degree of indexation is inefficiently high. This feature is characteristic of both passive and activist policy environments.

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    Article provided by Elsevier in its journal Research in Economics.

    Volume (Year): 64 (2010)
    Issue (Month): 1 (March)
    Pages: 28-35

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    Handle: RePEc:eee:reecon:v:64:y:2010:i:1:p:28-35
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    21. De Bruyne, Guido, 1997. "Wage Indexation and the Exchange Rate Regime: A Strategic Analysis," Journal of Macroeconomics, Elsevier, vol. 19(3), pages 571-589, July.
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