Multiple equilibria model with intrafirm bargaining and matching frictions

Julie Beugnot () and Mabel Tidball ()

Labour Economics, 2010, vol. 17, issue 5, 810-822

Abstract: In this paper, we combine a matching model derived from Pissarides (2000) in the case of large firms with monopolistic competition on the product market and the model of intrafirm bargaining à la Stole and Zwiebel (1996). Moreover, we allow for increasing returns to scale in the aggregate production function leading to multiple equilibria. We study the dynamics of such a framework and propose numerical simulations. We show that labour market regulation can make unlikely the occurrence of the Pareto inferior equilibrium and that product market deregulation can have an effect on employment contrary to the expected result when the economy stands at this equilibrium. We give also some policy recommendations to reach the Pareto superior equilibrium when multiple equilibria exist.

Keywords: Matching; frictions; Monopolistic; competition; Intrafirm; bargaining; Multiple; equilibria; Economic; policy (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (3)

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Working Paper: A Multiple Equilibria Model with Intrafirm Bargaining and Matching Frictions (2009)
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