d'Aspremont-Lynden, Claude
[UCL]
Ferreira, Rodolphe
[Université Louis Pasteur, Strasbourg, France]
Gerard-varet, Louis-André
[École des Hautes Études en Sciences Sociales, Marseille, France]
In a simple temporary general equilibrium model, it is shown that, if the number
of firms is small, imperfect price competition in the markets for goods may be
responsible for the existence of unemployment at any given positive wage. In our
examples involving two firms facing their "true" demand curves, total monopolistic
labor demand remains bounded as the wage rate goes to zero, and unemployment
prevails for a sufficiently large inelastic labor supply. In the competitive case total labor demand would go to infinity and intersect labor supply at a positive wage.
Bibliographic reference |
d'Aspremont-Lynden, Claude ; Ferreira, Rodolphe ; Gerard-varet, Louis-André. On Monopolistic Competition and Involuntary Unemployment. In: The Quarterly Journal of Economics, Vol. 105, no. 4, p. 895-919 (1990) |
Permanent URL |
http://hdl.handle.net/2078.1/52023 |