Sole supplier of labor

Assignment Help Business Economics
Reference no: EM13914153

Suppose a union is the sole supplier of labor to all the firms in an oligopoly, such as the United Auto Workers is to General Motors, Ford, Chrysler, and so on. Let the timing of moves be analgous to the model in Section 2.1.C: (1) the union makes a single wage demand, w, that applies to all the firms; (2) the firms observe (and accept) w and then simultaneously choose employment leves, Li fo firm i; (3) payoffs are (w-wa)L for the union, where wa is the wage that union members can earn in alternative employment and L = L1 +...+Ln is total employment in the unionized firms, and profit p(w, Li) for firm i, where the determinants of firm i's profit are described next.

All firms have the following production function: output equals labor; qi = Li. The market-clearing price is P(Q) = a -Q when the aggregate quantity on the market is Q = q1 +...+qn. To keep things simple, suppose that firms have no costs other than wages. What is the subgame-perfect outcome of this game? How (and why) does the number of firms affect the union's utility in the subgame-perfect outcome?

Reference no: EM13914153

Questions Cloud

Identify each given transaction as an operating activity : Identify each transaction as (a) an operating activity, (b) an investing activity, (c) a financing activity, (d) a noncash transaction, or (e) not on the statement of cash flows.
Average product of labor : A firm can manufacture a product according to the production function Q = 2(K)1/2(L)1/2 where K represents capital equipment and L is labor. The company has already spent $10,000 on the 4 units capital.Calculate the average product of labor, APL and ..
Bearer bonds : Decline in value over time-Are registered bonds-Are bearer bonds.
How are cash flows affected by days payable : Compare payables turnover and days' payable for both companies. How are cash flows affected by days' payable? How do Oracle's and Cisco Systems' ratios compare with the computer industry ratios shown in the chapter?
Sole supplier of labor : Suppose a union is the sole supplier of labor to all the firms in an oligopoly, such as the United Auto Workers is to General Motors, Ford, Chrysler, and so on.What is the subgame-perfect outcome of this game? How (and why) does the number of firms a..
Find the centroid of the region : Consider the crescent-shaped region between the circles x2 + y2 = 1 and (x - 0.5)2 + y2 = 2 as shown below.  Find the centroid of the region
Discuss the effectiveness of red bull''s sponsorships : Discuss the effectiveness of Red Bull's sponsorships. For example, Bull Stratos. Is this a good use of Red Bull's marketing budget? Where should the company draw the line.
Employees rarely use a special payroll : Companies with many employees rarely use a special payroll bank account from which to pay employees
Contribution margin per ticket : What is the estimated contribution margin per ticket sold for the benefit concert-What are the estimated total fixed costs for the benefit concert?

Reviews

Write a Review

Business Economics Questions & Answers

  Most tribal people prefer to be referred

Most tribal people prefer to be referred to by:

  Country pursues an expansionary fiscal policy

Capital mobility is fairly low, so the Fe curve is less shallowly sloped than the LM curve. The currency floats. What will happen if the country pursues than the LM curve. The currency floats. What will happen if the country pursues an expansionary f..

  Q1 suppose the parliament passes legislation making it more

q1. suppose the parliament passes legislation making it more difficult for firms to fire workers e.g. law requiring

  Explain the case of adverse supply shock in oil market

The most disruptive supply shocks in recenthistory were caused by OPEC, the Organization of PetroleumExporting Countries. In the early 1970s, OPEC's coordinatedreduction in the supply of oil nearly doubled the world price.

  Explain why issue of firm interdependence makes modelling

Explain why total revenue doesn't always increase when price is raised. Explain why the issue of firm interdependence makes modelling firm behavior under oligopoly so difficult. Why is so important to seasonally adjust data?

  Qtwo alternative designs are under consideration for a

q.two alternative designs are under consideration for a tapered fastening pin. the fastening pins are sold for 0.70

  Transactions involves spot exchange-contract

Identify whether each of the following transactions involves spot exchange, contract, or vertical integration.

  Illustrate what would be the effect of poor

Illustrate what would be the effect of poor weather on the consumer surplus, producer surplus, deadweight loss.

  What are some factors in this organization that might

Identify an organization with which you are familiar. What are some factors in this organization that might affect the strategies they take in developing their socially responsible efforts? What are some of these efforts?

  What are the profit-maximizing prices and quantities

Duopolists A and B face the following demand curves: QA = 100 - 2PA + 5PB and QB = 120 - 3PB + 4PA. If both firms have zero marginal cost, what are the profit-maximizing prices and quantities?

  Governments often to raise revenues to fund public projects

Governments often need to raise revenues to fund public projects like schools, road maintenance, parks, etc. One way governments raise revenue is to place taxes on the sale of certain goods. Suppose a government is debating whether to raise taxes on ..

  What would be the effect on the wage rate women receive

Suppose the government were to subsidize the wages of all women in the population by paying their employers 50 cents for every hour they worked. What would be the effect on the wage rate women receive? What would be the effect on the net wage employe..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd