A way of explaining unemployment through a wage-setting game

Attila Tasnádi

No 14/2003, Bonn Econ Discussion Papers from University of Bonn, Bonn Graduate School of Economics (BGSE)

Abstract: We investigate a duopsonistic wage-setting game in which the firms have a limited number of workplaces. We assume that the firms have heterogeneous productivity, that there are two types of workers with different reservation wages and that a worker's productivity is independent of his type. We show that equilibrium unemployment arises in the wage-setting game under certain conditions, although the efficient allocation of workers would result in full employment.

Keywords: Unemployment; Bertrand-Edgeworth; wage-setting games (search for similar items in EconPapers)
JEL-codes: E24 J41 (search for similar items in EconPapers)
Date: 2003
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Citations: View citations in EconPapers (1)

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