Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284749 
Year of Publication: 
2021
Citation: 
[Journal:] Canadian Journal of Economics/Revue canadienne d'économique [ISSN:] 1540-5982 [Volume:] 54 [Issue:] 2 [Year:] 2021 [Pages:] 864-891
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
Monopsony power by firms and social preferences by consumers are well established. We analyze how wages and employment change in a monopsony if workers compare their income with that of a reference group. We show that the undistorted, competitive outcome may no longer constitute the benchmark for welfare comparisons and derive a condition that guarantees that the monopsony distortion is exactly balanced by the impact of social comparisons. We also demonstrate how wage restrictions and subsidies or taxes can be used to ensure this condition, both for a welfarist and a paternalistic welfare objective.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

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