Figure 3.
The relationship between wages, labor bargaining power, and sunk cost intensity
The figure depicts a graphic characterization of the equilibrium. The two isoquant curves are |$\phi(R,k)$| and |$\psi(R,k)$|. Solid lines correspond to the case β = .3, while dashed lines correspond to the case β = .7. The figure depicts the equilibrium for the following parameterization: |$f(k)=k^\alpha$|, α = .4, r = 1.05, σ = .1, and Y = 1.
