Product Market Competition, Profit Sharing and Equilibrium Unemployment
Product Market Competition, Profit Sharing and Equilibrium Unemployment

Author: Erkki Koskela

Publisher:

Published: 2005

Total Pages: 33

ISBN-13:

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We investigate the implications of product market imperfections on profit sharing, wage negotiation and equilibrium unemployment. The optimal profit share, which the firms use as a wage-moderating commitment device, is below the bargaining power of the trade union. Intensified product market competition decreases profit sharing, but increases the negotiated base wage, because the wage-increasing effect of reduced profit sharing dominates the wage-reducing effect associated with a higher wage elasticity of labor demand. Finally, we show that intensified product market competition does not necessarily reduce equilibrium unemployment, because it induces both higher wage mark-ups and lower optimal profit shares.

The Economics of Competition, Collusion and In-between
The Economics of Competition, Collusion and In-between

Author: Claude d’Aspremont

Publisher: Springer Nature

Published: 2021-05-18

Total Pages: 160

ISBN-13: 303063602X

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This book provides a methodology for the analysis of oligopolistic markets from an equilibrium viewpoint, considering competition within and between groups of firms. It proposes a well-founded measure of competitive toughness that can be used in empirically relevant applications. This measure reflects the weight put by each firm on competition for market share relative to competition for market size – two dimensions of competition involving conflicting and convergent interests, respectively. It further explores several applications, such as the effect of tougher competition on innovation and of output market power on the emergence of involuntary unemployment, as well as the importance of strategic interactions for investment decisions. Relative to the dominant model of monopolistic competition, The Economics of Competition, Collusion and In-between aims to explore an alternative tractable model of firm competition opening the application of oligopoly theory to many fields in economics where general equilibrium features are crucial. It will be relevant to those interested in applied industrial organization, trade, macroeconomics (in particular macrodynamics) and quantitative economics.

General-Equilibrium Implications of International Product-Market Competition for Jobs and Wages
General-Equilibrium Implications of International Product-Market Competition for Jobs and Wages

Author: Hian Teck Hoon

Publisher:

Published: 2001

Total Pages: 0

ISBN-13:

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This paper extends the insight that trade increases international product-market competition to show that in a world with an endogenous natural rate of unemployment, countries can benefit through a decline in the natural rate. When the number of firms in the integrated world market is greater than the number of firms in each economy in autarky, all trading nations in a world of identical factor proportions experience a decline in equilibrium unemployment. When factor proportions differ, equilibrium unemployment must fall in the labor-abundant country but may rise or decline in the capital-abundant country.

Unemployment
Unemployment

Author: P. Richard G. Layard

Publisher: Oxford University Press, USA

Published: 2005

Total Pages: 686

ISBN-13: 9780199279166

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This broad survey of unemployment will be a major source of reference for both scholars and students.

Equilibrium Unemployment and Investment Under Product and Labour Market Imperfections
Equilibrium Unemployment and Investment Under Product and Labour Market Imperfections

Author: Heikki Kauppi

Publisher:

Published: 2008

Total Pages: 0

ISBN-13:

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We study the implications of product market competition and investment for price setting, wage bargaining and thereby for equilibrium unemployment in an economy with product and labour market imperfections. We show that intensified product market competition will reduce equilibrium unemployment, whereas the effect of increased capital intensity is more complex. Higher capital intensity will decrease the equilibrium unemployment when the elasticity of substitution between capital and labour is less than one, while the reverse happens when this elasticity is higher than one but smaller than the elasticity of substitution between products. Finally, we demonstrate how labour and product market imperfections, characterized by the wage and price setting mark-ups, affect the optimal capital stock. Our findings raise important questions for future empirical research.