Monopsony Wage Determination and Multiple Unemployment Equilibria in a Non-Linear Search Model

Martin Chalkley

The Review of Economic Studies, 1991, vol. 58, issue 1, 181-193

Abstract: This paper extends the analysis of wage determination in a search environment to the case where firms employ numerous individuals and benefit from team production. It is shown that monopsony wage offers may display perverse comparative statics properties. Interesting problems then arise concerning the uniqueness of search equilibria. These problems are addressed in a simple equilibrium setting where it is shown that multiple equilibria may exist, with an equilibrium that displays bootstrap properties. Our results suggest the possibility of explaining unsatisfactory equilibria as the consequence of profit-maximizing wage choices in environments with imperfectly coordinated trading.

Date: 1991
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:58:y:1991:i:1:p:181-193.

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