Off-campus UMass Amherst users: To download dissertations, please use the following link to log into our proxy server with your UMass Amherst user name and password.
Non-UMass Amherst users, please click the view more button below to purchase a copy of this dissertation from Proquest.
(Some titles may also be available free of charge in our Open Access Dissertation Collection, so please check there first.)
Three essays on coordination failures
Abstract
This dissertation presents an analysis of coordination problems which are not solved by competitive markets. I argue that a variety of coordination failures occur if relations between a firm and its employees, and between a firm and other firms, are market mediated. In the first essay I consider the profit maximizing choice of the individual firm over a continuous job security variable. I argue that competitive markets yield Pareto suboptimal levels of job security due to agency problems, and the negative externality of aggregate demand instability generated by those firms that hire and fire over the cycle. I develop a model incorporating these features to generate reaction functions for the optimal level of job security in an individual firm in the light of the decisions of other firms. In the second essay I model the equilibrium composition of a population of firms faced with decisions over a discrete job security variable. Firms either offer no security against cyclical dismissal, or total security (long term employment arrangements). This model is not about how firms select the optimal level of tenure, but about how the distribution of firms between the two extremes is selected on the basis of profitability. I develop a model of a two-way relationship between the percentage of firms offering long term employment arrangements and demand instability. I show that it is possible to have multiple equilibria. In the third essay I argue that cooperative inter-firm relations, represent a solution to coordination failures that may take the form of both Prisoner's Dilemma and Hawk-Dove games. Inter-firm cooperation therefore facilitates the realization of potential Marshallian external economies, that would not be realized in the absence of such cooperation. I extend the Hawk-Dove game by considering both iteration and non-random pairing of agents to show that the viability and stability of cooperation are enhanced under conditions which are considered as impediments under the Walrasian model of market exchange. This model is then applied to the British and Italian furniture sectors. I present conclusions in Chapter 4.
Subject Area
Economic theory|Labor economics|Economics
Recommended Citation
Parkin, Richard John, "Three essays on coordination failures" (1994). Doctoral Dissertations Available from Proquest. AAI9420674.
https://scholarworks.umass.edu/dissertations/AAI9420674