Smith, E (1999) Search, Concave Production, and Optimal Firm Size. Review of Economic Dynamics, 2 (2). pp. 456-471. DOI https://doi.org/10.1006/redy.1998.0056
Smith, E (1999) Search, Concave Production, and Optimal Firm Size. Review of Economic Dynamics, 2 (2). pp. 456-471. DOI https://doi.org/10.1006/redy.1998.0056
Smith, E (1999) Search, Concave Production, and Optimal Firm Size. Review of Economic Dynamics, 2 (2). pp. 456-471. DOI https://doi.org/10.1006/redy.1998.0056
Abstract
This paper demonstrates that in a free entry search and bargaining economy with concave production firms over-employ. Bargaining allows the worker's wage to depend upon marginal productivity. As such, with strictly concave production, the wage declines as firms employ more labour. Firms react to this declining wage function by choosing an inefficiently large number of workers. However, in equilibrium, fewer firms are likely to enter causing aggregate employment and vacancies to fall.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | search; Bargaining; labor hoarding; minimum wages; unions |
| Subjects: | H Social Sciences > HB Economic Theory |
| Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
| SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
| Depositing User: | Unnamed user with email elements@essex.ac.uk |
| Date Deposited: | 29 Jun 2012 12:40 |
| Last Modified: | 06 Jan 2022 13:30 |
| URI: | http://repository.essex.ac.uk/id/eprint/2686 |