We consider a three sector small open economy with a monopolistic non traded sector, a competitive traded good sector, and a capital good sector. In both the consumer good sector, there are enterprise unions that bargain sequentially over wages and employment as in Manning [1987]. This approach...

This paper considers the effect of a unionized nontraded sector on welfare and policy in an open economy. In equilibrium, there are endogenous wage and price setting, there may be unemployment, and non-Walrasian policy effects. Nominal wages and prices become pegged to the price of tradables....

In this paper we consider the entry and exit of firms in a dynamic general equilibrium model with capital. At the firm level, there is a fixed cost combined with increasing marginal cost, which gives a standard U-shaped cost curve with optimal firm size. Entry is determined by a free entry...

This paper considers the incentives of oligopolistic firms to diversify into technologically related markets when there are diseconomies of scope. There is a rent extraction incentive for firms to adopt flexible technologies that enable them to enter technologically related markets, thereby...

The conventional menu cost framework performs poorly with realistic labour supply elasticities: the menu costs required for price rigidity are very high and the welfare consequences of monetary disturbances are negligible. We show that the presence of dual labour markets greatly improves the...

In this paper a unified framework is developed for modeling imperfect competition in a monopolistic economy in a dynamic setting. Concentrating on the steady state analysis, a graphical approach is developed in consumption/leisure space. In both cases, there is a distortion towards leisure and...

New Keynesian literature assumes symmetric industrial structure when analysing explanations of money non-neutrality. This paper analyses the impact of modifying this assumption by allowing for a mixed industrial structure; some industries are characterized by monopolistic competition, others by...

The conventional menu cost framework performs poorly with realistic labour supply elasticities; the menu costs required for price rigidity are very high and the welfare consequences of monetary disturbances are negligible. We show that the presence of dual labour markets greatly improves the...

A simple two-sector, general-equilibrium macromodel is presented wi th oligopolistic price determination in the product market and a unionized labor market. In the first stage, unions set the nominal wage, and in the second stage, firms choose outputs given wages. By altering the balance of...

How do heterogeneous types of product market competition affect the macroeconomic properties of the economy? The author considers an economy with three different types of product market: oligopolistic, competitive, and fix-price. He examines the effect of an increase in the money supply and how...