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Arijit Mukherjee
''Note on a generalized wage rigidity result''
( 2007, Vol. 10 No.12 )
Considering Cournot competition, this note shows that, if the firms differ in labor productivities, the equilibrium wage rates under a centralized labor union are not independent of the number of firms and product differentiation if the labor union charges a uniform wage rate. However, if the centralized labor union can discriminate wage rate between the firms, the equilibrium wage rates do not depend on the number of firms and product differentiation. Hence, whether the wage rigidity result of Dhillon and Petrakis (2002) holds with asymmetric firms depends on the wage setting behavior of the labor union. The effects of the number of firms and product differentiation on the equilibrium wage rate are also shown.
Keywords: Asymmetry
JEL: J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining: General
J3 - Wages, Compensation, and Labor Costs: General
Manuscript Received : Sep 25 2007 Manuscript Accepted : Oct 09 2007

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