Union Games: Technological Unemployment

Given a production economy, we define a trade union game by considering strategic behavior on factor supplies. We refer to the Nash equilibria of this game as trade union equilibria. First we analyze situations under which unemployment of factors are supported as trade union equilibria. The degree of unemployment depends on technological conditions. In this line, we suggest a source of unemployment which differs from the usual sources provided in the related literature. Then, we state a limit result which shows that when the market power of trade unions decreases the corresponding sequence of trade union equilibria converges to the walrasian equilibrium, that is, to full employment of factors.