Abstract
Profit-maximizing firms can only approximate marginal product efficiency and corresponding justice criteria in the long run when all the prerequisites for perfect competition are satisfied in both product and input markets. Absent these ideal conditions, normal profit-maximizing behavior leads firms to undercompensate workers unless they consciously pursue alternative strategies such as profit satisficing or other normative-based strategies. Most significantly, true involuntary unemployment can also occur, particularly among low-income individuals who lack substantial non-wage incomes and thus need to work.
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Johnson, R.D. (2017). Labor Market Equilibrium?. In: Rediscovering Social Economics. Perspectives from Social Economics. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-51265-5_10
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DOI: https://doi.org/10.1007/978-3-319-51265-5_10
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