Involuntary Unemployment and Imperfect Competition: A Game-theoretic Macromodel

Abstract

The purpose of this chapter is to suggest that the methodology of non-cooperative game theory, which is so prominent in partial equilibrium analyses of imperfectly competitive markets, can fruitfully be adopted to study traditional macroeconomic issues that have usually been approached via non-strategic general equilibrium models or treated solely as disequilibrium phenomena.

The encouragement of George Feiwel, the comments of Andrew Atkeson, Jean-Pascal Benassy, Frank Hahn, Guy Laroque, Nancy Stokey, and the participants in the NBER 1986 Summer Institute group on Economic Fluctuations led by Russell Cooper, and the financial support of the National Science Foundation (grants SES 83–08723 and SES 86–05666) are appreciated.