On Equilibrium in Monopolistic Competition with Endogenous Labor
10 Pages Posted: 17 Jun 2020
Date Written: 2020
We consider a model of monopolistic competition with several heterogeneous sectors and endogenous labor supply. For low (high) values of the labor supply elasticity, we show that there is always a unique equilibrium. For medium values of the labor supply elasticity, the set of equilibria (if non-empty) can comprise of several equilibria, with the number of equilibria bounded by the number of sectors.
Keywords: labor elasticity, multiple equilibria, stability
JEL Classification: D430, L130
Suggested Citation: Suggested Citation