THE RATIONALLY SHRINKING UNION

Barry Nalebuff and Richard Sansing

Economics and Politics, 1996, vol. 8, issue 1, 51-59

Abstract: We analyze a voting model in which a democratic monopoly labor union rationally shrinks towards zero over time. In our model, preferences are not single‐peaked so that this shrinkage may occur in spite of objections by the median voter. We characterize the wage‐employment path as a function of the time horizon and the discount rate. We show that the employment path is independent both of the labor demand curve and of the workers’utility functions.

Date: 1996
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https://doi.org/10.1111/j.1468-0343.1996.tb00120.x

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