Union objectives and indexation externalities in a monopolistically competitive economy

Jonathan G. James and Phillip Lawler

Research in Economics, 2010, vol. 64, issue 1, 28-35

Abstract: This paper extends the literature on indexation externalities by analyzing equilibrium and efficient indexation in a unionized economy characterized by a monopolistically competitive goods market. The assumption that union objectives relate to both employment and the real wage implies that union indexation decisions are associated with a negative externality and, as a consequence, the equilibrium degree of indexation is inefficiently high. This feature is characteristic of both passive and activist policy environments.

Keywords: Indexation; Union; objectives; Externalities (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reecon:v:64:y:2010:i:1:p:28-35

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