Wage Rigidity and Wage Rivalry: An Oligopolistic Approach
1982 (English)Report (Other academic)
The aim of this paper is to present a theory of wages based on an application of oligopoly theory to labor unions, and to use this theory to explain why nominal wage rigidity in the short run does not necessarily imply money illusion or other forms of irrational behavior. Specifically, the paper shows formally that if workers are concerned about relative wages, rational behavior does not require them to demand full compensation for all price increases unless they expect all other workers to be fully compensated.
Place, publisher, year, edition, pages
Stockholm: IIES , 1982. , 32 p.
Seminar Paper / Institute for International Economic Studies, Stockholm University, ISSN 0347-8769 ; 225
IdentifiersURN: urn:nbn:se:su:diva-41454OAI: oai:DiVA.org:su-41454DiVA: diva2:330345