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Wage Determination and Capital Decisions in a Dynamic Monopoly Union Model


  • Saqib Jafarey

    (University of Essex, U.K.)

  • Yannis Kaskarelis

    (University of Macadonia, Greece)

  • Natasha Miaouli

    (Athens University of Economics and Business, Greece)


This paper uses a dynamic monopoly union model to analyse the joint determination of wages, employment and investment in the absence of binding contracts. The union maximizes a utilitarian utility function while the firm faces a neoclassical investment problem with adjustment costs. Concentrating on noncommitment equilibria, we solve for Markov strategies. When the model is tested for Greek manufacturing during the period 1954-1993, the data do not reject the theoretical predictions.

Suggested Citation

  • Saqib Jafarey & Yannis Kaskarelis & Natasha Miaouli, 1998. "Wage Determination and Capital Decisions in a Dynamic Monopoly Union Model," Ekonomia, Cyprus Economic Society and University of Cyprus, vol. 2(1), pages 73-89, Summer.
  • Handle: RePEc:ekn:ekonom:v:2:y:1998:i:1:p:73-89

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    References listed on IDEAS

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    More about this item

    JEL classification:

    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy


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