Chamberlinian Imperfect Competition Among Rational Firm-Workers Coalitions: Is Underbidding by Unemployed Workers Less Effective?

Salvatore Curatolo ()

No 2001-EP05, Economics Department Working Papers from Department of Economics, Parma University (Italy)

Abstract: Macroeconomic models with imperfect competition usually result in theoretical own-price elasticities of labour demand higher than one in absolute value. Yet often empirical studies find much lower estimated elasticities. A Chamberlinian two sectors model of imperfect competition with decentralised wage bargaining on labour productivity is here developed and the results show that lower theoretical elasticities are faced by rational firm-workers coalitions. Thus a lower effectiveness of underbidding by unemployed workers is theoretically suggested. Moreover an higher long term dependence of employment on nominal shocks is an other feature suggested by the model’s results.

Keywords: elasticity of labour demand; Long term; Imperfect competition; Chamberlin; Wage bargaining; Labour productivity; Firm-workers coalitions; Rationality (search for similar items in EconPapers)
JEL-codes: D43 E12 E24 E52 J23 J24 J31 J50 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:par:dipeco:2001-ep05

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