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On the Non Uniqueness of Competitive Equilibrium with an Intensive Margin

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  • FitzRoy, Felix R

Abstract

Adding an intensive margin, such as working time, to a simple two-factor general equilibrium model of efficient contracts yields at least two perfectly competitive equilibria under simple and intuitive assumptions, such as nonwage labor costs. Longer hours or greater division of labor are associated with lower workers' utility and a higher return on capital in respective equilibria, so distributive conflict appears to be unavoidable even in the choice of competitive equilibrium. The quasi-normative implications of a unique, efficient market allocation that have formed the basis of economic policy recommendations since Adam Smith lose their foundation. Copyright 1993 by Scottish Economic Society.

Suggested Citation

  • FitzRoy, Felix R, 1993. "On the Non Uniqueness of Competitive Equilibrium with an Intensive Margin," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(3), pages 283-294, August.
    • Handle: RePEc:bla:scotjp:v:40:y:1993:i:3:p:283-94
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    Cited by:

    1. François Contensou & Radu Vranceanu, 1998. "A model of working time under utility competition in the labor market," Journal of Economics, Springer, vol. 67(2), pages 145-166, June.
    2. François Contensou & Radu Vranceanu, 1996. "Structure de coût généralisée et horaire optimal," Économie et Prévision, Programme National Persée, vol. 125(4), pages 37-50.

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