This paper uses Shapiro and Stiglitz’s (1984) efficiency wage model embodying the firm’s choice of location to show the existence of an optimal intermediate location without assuming a transport rate that increases with distance. Based on the viewpoint of Shapiro and Stiglitz, we demonstrate...

This paper examines the unemployment and wage effects of the tax shift from an income tax to a consumption tax in a shirking-type efficiency wage model. It is found that the results of the ex ante individual income-neutral and aggregate revenue-neutral proposals in this paper's efficiency wage...

The efficiency wage theory is generally regarded as a plausible explanation as to why wages do not fall to clear labor markets in the presence of involuntary unemployment. At the current stage of its development, not much is said concerning the role of nominal money and the fluctuations in...

A key feature of monopsony is that a single firm pays its workers a wage ( w) less than the marginal revenue product (MRP ). Ever since its creation by Joan Robinson (1933), this feature has been explained as a symbol of the monopsonistic firm exploiting its workers. By using a simple standard...