Equilibrium Involuntary Unemployment under Oligempory
We show that equilibrium involuntary unemployment emerges in a multi-stage game model where all market power resides with firms, on both the labour and the output market. Firms decide wages, employment, output and prices, and under constant returns there exists a continuum of subgame perfect equilibria involving unemployment. A firm does not undercut the equilibrium wage since then high wage firms would attract its workers, thus forcing the low wage firm out of both markets. Full employment equilibria may also exist, but only the involuntary unemployment equilibria are robust to decreasing returns.
|Date of creation:||Jun 1999|
|Contact details of provider:|| Postal: Josefstädterstr. 39, A-1080 Vienna, Austria|
Phone: ++43 - (0)1 - 599 91 - 0
Fax: ++43 - (0)1 - 599 91 - 555
Web page: http://www.ihs.ac.at
More information through EDIRC
|Order Information:|| Postal: Institute for Advanced Studies - Library, Josefstädterstr. 39, A-1080 Vienna, Austria|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Madden, Paul & Silvestre, Joaquim, 1991. " Imperfect Competition and Fixprice Equilibria When Goods Are Gross Substitutes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 93(4), pages 479-494.
- Jones, Larry E & Manuelli, Rodolfo E, 1992.
"The Coordination Problem and Equilibrium Theories of Recessions,"
American Economic Review,
American Economic Association, vol. 82(3), pages 451-471, June.
- Larry E. Jones & R. E. Manuelli, 1987. "The Coordination Problem and Equilibrium Theories of Recessions," Discussion Papers 753, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Jean-Pascal Benassy, 1989. "Market Size and Substitutability in Imperfect Competition: A Bertrand-Edgeworth-Chamberlin Model," Review of Economic Studies, Oxford University Press, vol. 56(2), pages 217-234.
- Heal, Geoffrey, 1981. "Rational rationing and increasing returns an example," Economics Letters, Elsevier, vol. 8(1), pages 19-27.
- repec:cor:louvrp:-536 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:ihs:ihsesp:68. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Doris Szoncsitz)
If references are entirely missing, you can add them using this form.