Macroeconomic coordination failure under oligempory

Esma Gaygisiz, Paul Madden

Research output: Contribution to journalArticlepeer-review


Each sector of a multi-sector overlapping generations model is an oligempory with a given number of firms, oligopsonists in the sectoral (spatially differentiated) labour market and oligopolists in the sectoral (homogeneous) output market. When there is aggregate unemployment, and a firm raises wages beyond the local full employment level acquiring labour from neighbours, sectoral output supply becomes constant and the firm faces a flat output demand curve under constant returns to labour (upward sloping under decreasing returns). Multiple temporary equilibria and Pareto-ranked steady-state equilibria emerge; the associated sunspot equilibria exhibit counter-cyclical markups, inter alia.
Original languageEnglish
Pages (from-to)93-112
Number of pages19
JournalEconomic Theory
Issue number1
Publication statusPublished - Aug 2002


  • Coordination failure
  • Oligempory
  • Sunspot equilibria


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