Sweatshops: the theory of the firm revisited

Maryke Dessing (Economist, Geneva, Switzerland)

Journal of Economic Studies

ISSN: 0144-3585

Publication date: 1 December 2004

Abstract

When the labor supply schedule is bending forward at low wage levels, the average cost curve of firms does the same. This leads to the possibility of multiple equilibria, in particular for monopolists, thereby opening a broader range of options and keeping non‐profitable firms in business. However, the global maximum is always occuring along the negatively sloping segment of the labor supply. Therefore, total welfare is declining, except perhaps in the case of monopolists, when firms are pursuing a low‐wage strategy to expand output and profits, and are exploiting labor's subsistence needs to pay wages below the marginal product.

Keywords

Citation

Dessing, M. (2004), "Sweatshops: the theory of the firm revisited", Journal of Economic Studies, Vol. 31 No. 6, pp. 549-579. https://doi.org/10.1108/01443580410569271

Download as .RIS

Publisher

:

Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.