9058009880

OHAPTER T T T

33

86230

t.hat. ia, the unit. cnat. Ir poa1t.1vely related t.o wagę* and negat.ively to the prodnot. 1 v 1 ty. Tt. will be lower the lower 1* t.he wagę ratę and the hlgher 1* the prodnot. 1 v 1 ty.

Since the prloe w1 1 1 anyway he aowe funot.lon of unit. co*t. (1t. will be, 1n faot. suoh oo*t., plu* a wargln over 1t.), t.hl* Iwpllea t.hat.    one    oan 1«prnve h1*    coipet. 11.1 venea*    elther

1norea*1ng prodnot. 1 v 1 ty, V; or lowerlng t.he wagę ratę, w.

The . oowpet. 11.1 ve gawe het.ween f1rwa (or het.ween anb-ayat.ewa) oan t.hns he at.art.ed elther heoanae .sowę of t.hew suooeed In Inoreaning t.helr p rodu ot. 1v1t.y, or heoau«e aowe of t.hew anooeed    1n    out.tlng the loney    wagę*    pąld t.o    t.helr

ewp1oyeea.

Tt 1* not. very Iwport.ant. t.o eat.ahllah who (whioh flrwa,

# ^% «

whioh aub-ay * tein , whioh count.riea) hegan t.he^- oowpe 1.1 1.1 ve gawe aowet.lwe In t.he wid Sevent1e«, nor . 11.    1* liportant. t.o

eat.ahllah how -whet.her In t.erwa of prodnot. 1 v 1 t.y Inoreaae* or In term* of wagę out.*. What. wat.t.era la t.hat., onoe t.he gawe had heen at.art.ed, • hot.h at.rat.eglea were u*ed and wagę out.a are not. llkely to have played a aecondary role, wlt.h relevant. aooial, aa well aa econowlc, negat.1ve feed-haoka.

3 . A f nrther deve ][op»ent_of _the oowpet1t1veneaa argu»ent..

T«et. na go    haok    now t.o t.he oowpe 1.11.1 veneaa    arguient.,    and 1n

part.loular to    t.he    poaalhle ohjeot.lon    t.hat.    we left.    part.ly

unanawered In aeot.lon 3. The ohjeot.lon waa t.hat. the auggeat.ed ooahinat.lon of at.rat.eglea 2 (t.he wore prodnot! ve one) and 1 (t.he leaa produot.1.ve one) 1a not. poaalhle, onoe aodet.y haa ohoaen t.o adopt. a warkot, allocatlon weohanfan; onoe t.hla haa heen done, t.he warket. foroea t.hewaelvea woni d aqueeze out. the leaa oowpe1.1 1.1 ve at.rat.egy. Therefore elther we *have* at.rat.egy 2 or we ¹ have¹ at.rat.egy 1 . We oannot. *have* hot.h of t.hew a t. t.he aawe t.lwe, unleaa for a ahort. and t.ranait.ory period, during whioh at.rat.egy 2, onoe nva1 labie, la aquee*1ng out. at.rat.egy 1 .

The point. oan he auwwarlzed in the followlng way. IJnder warket. oondlt. łona, the prodnot.* oowpe te re gardle a a of t.he t.echniqnea wlt.h whioh whioh t.hey have heen prodnoed; therefore, 1f one bett.er ' teohn1que' happena t.o heoowe ava1 labie (t.he one aaaoolat.ed wlt.h at.rat.egy 2) and adopt.ed hy aowe of t.he oowpe 1.1 tor a, t.he out.put. prodnoed wlt.h t.hat. t.eohn1que ooat.a leaa and oan he aold at. a lower prloe. The cnwwod1t.1e* prodnoed wlt.h t.he Inferior t.eohn1que oannot. at.and mich prloe oowpet.! t.lon, unleaa t.he flrwa adopt.lng auoh t.eohnique are auhaldlzed -hut. t.hla would v1olat.e t.he rulea of * f a 1 r • oowpet 11.1 on ' - or unleaa t.helr workera aooept. t.o lower t.helr wagę a 1n a proportlnn t.hat. o o u ld wat. oh t.he p rodno 1.1 v 1 t.y d 1 fferen1.1 a 1 of t.he cowpet.1ng t.echn1quea. Kven In t.hla latt.er oaae, however, 1n t.he long run t.he oowpet.1t.1on In t.he lahonr warket would reat.ore lahonr ooat.a howogenelt.y, and the heat. t.echn1qne will def Inlt.ely aqneeze out. the Inferior one.