Capital accumulation in a corporatist economy (Q1311464)

This volume is a collection of theoretical essays on the problems of functional income distribution and capital accumulation in a corporatist economy where workers are organized in trade unions and are politically strong. The game-theoretical approach is used in the analysis. The book consists of 6 chapters. Chapter 1 introduces the central issues concerning the labor-market problems facing a corporatist economy. Chapter 2 considers the case where a firm and a labor union must confront each other in a long-term relationship regulated by short-term contracts. The long-term relationship is modeled by a sequence of offer-counteroffer games and investment decisions. The existence and the dynamic inefficiency of the perfect equilibrium of the game is proved, and an alternative procedure is proposed such that it is both time consistent and dynamically efficient. Chapter 3 considers an economy in which a politically powerful working class and a capitalist investor class must find consistent ways of implementing a dynamically efficient arrangement. In this chapter, the author has proposed a new solution technique based on the value function in dynamic programming and a fixed point for an infinite-horizon game. With this approach, the steady state can be analytically solved and the computation of the entire solution becomes that of finding a fixed point. Chapter 4 explores the implications of labor mobility for the role played by the centralization of a wage bargaining in increasing welfare. Chapter 5 endogenizes labor mobility, and it shows that an economy with large firms may outperform one with small firms, because it is able to internalize the externalities generated by stable long-term relationships. Chapter 6 deals with the choice of labor market regimes. It shows that because of the existence of externalities, a completely centralized or completely decentralized wage bargaining procedure may be more efficient than a partially decentralized one. Overall, this volume is an interesting study of the relationship between capital accumulation and corporatism. It is also a useful references on applications of game theory.