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Labor- and Product-Market Structure and Excess Labor


  • Segendorff, Björn

    (Dept. of Economics, Stockholm School of Economics)


This study analyzes under what labor- and product-market structures a firm may hire more labor than needed to produce its profit maximizing output. Three labor-market structures are studied: (1) decentralized (firm-specific unions), (2) one-sided centralization (central union and several firms), and (3) centralized (central union and employers' association). Excess labor is explained by the risk-sharing motive that in the model exists between the risk-averse workers and the risk-neutral firm owner. Labor may be excessively hired in any of the labor-market structures and under a wide range of product-market structures; duopoly, oligopoly etc.

Suggested Citation

  • Segendorff, Björn, 1998. "Labor- and Product-Market Structure and Excess Labor," SSE/EFI Working Paper Series in Economics and Finance 249, Stockholm School of Economics.
  • Handle: RePEc:hhs:hastef:0249

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    More about this item


    Efficient wage bargaining; centralization; market power; technical efficiency.;

    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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