A Model of Duopolistic Unionism Exhibiting Downward Wage Rigidity

Dan Kovenock, Kealoha Widdows and James B. Dworkin

Canadian Journal of Economics, 1991, vol. 24, issue 1, 55-69

Abstract: This paper presents a simple model of sequential wage setting by two unions, each of which is attached to a firm in a duopolistic output market. The authors find that, for a large range of unanticipated downward demand shocks, the equilibrium exhibits downward wage rigidity. Neither union chooses to alter its wage even though wages are flexible. This occurs despite the reduction in employment accompanying these shocks.

Date: 1991
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Working Paper: A Model of Duopolistic Unionism Exhibiting Downward Wage Rigidity (1988)
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