On Equilibrium in Monopolistic Competition with Endogenous Labor

On Equilibrium in Monopolistic Competition with Endogenous Labor

Alexey Kushnir

Carnegie Mellon University - David A. Tepper School of Business

Alexander Tarasov

National Research University Higher School of Economics

Robertas Zubrickas

University of Bath

Abstract

We consider a model of monopolistic competition with several heterogeneous sectors and endogenous labor supply. For low (high) values of the labor supply elasticity, we show that there is always a unique equilibrium. For medium values of the labor supply elasticity, the set of equilibria (if non-empty) can comprise of several equilibria, with the number of equilibria bounded by the number of sectors.