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When employers face a trade-off between growing large and paying low wages - that is, when they have monopsony power - some productive employers will decide to acquire fewer customers, forgo sales, and remain small. These decisions have adverse consequences for aggregate labor productivity....
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The Great Recession, which was preceded by the financial crisis, resulted in higher unemployment and inequality. We propose a simple model where firms producing varieties face labor-market frictions and credit constraints. In the model, tighter credit leads to lower output, lower number of...
Persistent link: https://www.econbiz.de/10011494040
Based on a model with imperfectly competitive labor and product markets the real consequences of labor market shocks for economies with either an earnings-related or flatrate unemployment compensation system are considered. A distinctive feature of the analysis is the comparison of both...
Persistent link: https://www.econbiz.de/10011403752
Economic theory suggests that monopoly prices hurt consumers but benefit shareholders. But in a world where individuals …
Persistent link: https://www.econbiz.de/10011958679
received no attention in the new trade theory and the new economic geography. We set up a simple monopolistic competition model …
Persistent link: https://www.econbiz.de/10003759291
This paper provides a novel microeconomic foundation for pecuniary human capital externalities in a labor market model of monopsonistic competition. Multiple equilibria arise because of a strategic complementarity in investment decisions. -- Externalities ; human capital ; multiple equilibria
Persistent link: https://www.econbiz.de/10003759894
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the monopoly pricing distortion. In the autarky equilibrium these subsidies trigger entry, but they eventually do not lead …
Persistent link: https://www.econbiz.de/10003894876
We use unique plant-level data to study the link between the local availability of services and the decision of manufacturing firms to source materials from abroad. To guide our empirical analysis we develop a monopolistic-competition model of the materials sourcing decisions of heterogeneous...
Persistent link: https://www.econbiz.de/10003937886