Search, Concave Production, and Optimal Firm Size
Eric Smith ()
Review of Economic Dynamics, 1999, vol. 2, issue 2, 456-471
This paper demonstrates that in a free entry search and bargaining economy with concave production firms over-employ. Bargaining allows the worker's wage to depend upon marginal productivity. As such, with strictly concave production, the wage declines as firms employ more labour. Firms react to this declining wage function by choosing an inefficiently large number of workers. However, in equilibrium, fewer firms are likely to enter causing aggregate employment and vacancies to fall. (Copyright: Elsevier)
Keywords: search; Bargaining; labor hoarding; minimum wages; unions (search for similar items in EconPapers)
JEL-codes: J30 J41 J50 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51) Track citations by RSS feed
Downloads: (external link)
http://dx.doi.org/10.1006/redy.1998.0056 Full text (application/pdf)
Access to full texts is restricted to ScienceDirect subscribers and ScienceDirect institutional members. See http://www.sciencedirect.com/ for details.
Working Paper: Search, Concave Production, and Optimal Firm Size (1994)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:issued:v:2:y:1999:i:2:p:456-471
Ordering information: This journal article can be ordered from
https://www.economic ... ription-information/
Access Statistics for this article
Review of Economic Dynamics is currently edited by Jonathan Heathcote and Vincenzo Quadrini
More articles in Review of Economic Dynamics from Elsevier for the Society for Economic Dynamics Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().