Price discrimination and rationing of low price customers can often be observed (viz. flight and theater tickets, sales of branded goods). We construct a monopoly model to explain this phenomenon. A firm has the option to charge a high price on a 'day 1', and a low price on a 'day 2', and ration...

In a general equilibrium macro model with wage bargaining, agents are divided into capitalists and workers. The markets for produced goods and money are competitive, but the wage rate is determined by negotiation between an employers' union and a trade union. Unions are supposed to be "long...

This paper considers political competition and the consequences of political polarization when parties are better informed about how the economy functions than voters are. Specifically, parties know the cost producing a public good, voters do not. An incumbent's choice of policy acts like a...

This paper analyses wages and employment in a repeated game between a union and a firm. The parties cannot enter a binding contract, and revenue is fluctuating. It is shown that if discount factors are moderate, then the best sequence of wage rates and employments sustainable in a subgame...

An overlapping generations, macro model where consumers are divided into workers and capitalists is analysed. In each period the wage rate is negotiated between an employers' union and a trade union. Other prices adjust competitively. The solution concept used is cooperative, the wage rate...

This paper studies reputation for honesty in a repeated game with one long run player facing a sequence of short run players. The long run player announces which actions he will take in the future. The long run player has several types, for some but not all it costs payoff not to follow the...

A multisectoral temporary general equilibrium macro model with wage bargaining is presented. In each sector agents are divided into capitalists and workers. The markets for produced goods and money are competitive, but the wage rate in a sector is determined by negotiation between an employers'...

We study the consequences of imperfect competition in a macro model with only one imperfection; that of labor market competition. Otherwise the model is ‘clean’; agents are optimizers, prices are endogenous, and expectations are rational. We show that, although imperfect competition in...

Consider a labor market where the parties are able to write contracts contingent on the state of demand and productivity. If it is realistically assumed that the workers differ wrt. their reservation wages, then it becomes a natural presumption that firms on the market will offer several...

Adaptive contracting is defined as a strategy in which a principal experiments - through trial-and-error - with the degree of contractual completeness. We highlight two potential benefits of an adaptive approach: First, the implied delegation of authority can be beneficial for the principal even...