This note responds to a comment by de Fontenay and Gans "Organizational Design and Technology Choice under Intrafirm Bargaining: Comment," on the possibility of replacement workers, published in the American Economic Review, March 2003

The impacts of introducing or tightening time limits on welfare use are studied in an efficiency wage model. Those losing access to regular benefits receive some smaller benefit, which can be interpreted as food stamps. Stricter time limits raise both employment and profits and generally reduce...

This paper reconsiders the result of Stole and Zwiebel (1996) that when a firm bargains with its workers over the wages in non-binding contracts, the firm will over-employ workers to reduce the hold-up power of any one. This result has stood in contrast to conclusions drawn in the literature on...