The Pricing Paradox and Tatonnement Instability in a Wage-Maximizing Economy

D. Suvakovic

G.R.E.Q.A.M. from Universite Aix-Marseille III

Abstract: A simple model of the Arrow-Debreu type is used to analyze the short-run performance of an employee-controlled wage-maximizing economy. It is found that an increase in demand, caused by a shift in consumers' preferences, leads to a fall in a good's equilibrium price, which indicates that paradoxical short-run pricing is inherent in wage-maximization.

Keywords: PRICES; CONSUMPTION; WAGES; MACROECONOMICS (search for similar items in EconPapers)
JEL-codes: D12 D51 E13 J54 (search for similar items in EconPapers)
Pages: 18 pages
Date: 1999
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Persistent link: https://EconPapers.repec.org/RePEc:fth:aixmeq:99a59

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