Holdup in Oligopsonistic Labour Markets : A New Role for the Minimum Wage

We consider a labour market model of oligopsonistic wage competition and show that there is a holdup problem although workers do not have any bargaining power. When a firm invests more, it pays a higher wage in order to attract workers from competitors. Because workers participate in the returns on investment while only firms bear the costs, investment is inefficiently low. A binding minimum wage can achieve the first-best level of investment, both in the short run for a given number of firms and in the long run when the number of firms is endogenous

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Year of publication:	[2021]
Authors:	Kaas, Leo ; Madden, Paul
Publisher:	[S.l.] : SSRN
Subject:	Mindestlohn \| Minimum wage \| Arbeitsmarkttheorie \| Labour market theory \| Investition \| Investment \| Oligopol \| Oligopoly \| Monopolistischer Wettbewerb \| Monopolistic competition

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