Abstract
In a recent article in this JOURNAL, Oswald (1 982) analyses the behaviour of a ' utilitarian' trade union which maximises the expected utility ofits representative member subject to the constraint imposed by the employing industry's demand curve for labour. At the end of his section III, Oswald makes the surprising statement that 'it is not always true, despite the folk-lore on this topic in labour economics, that the Union's optimal wage is a decreasing function of the elasticity of labour demand'. He goes on to say that 'it is not always true that the optimal wage rate is a decreasing function of the employed man's degree of risk aversion'. Oswald does not produce counter-examples: his claims rest on assertions that certain derivatives are ambiguous in sign. The object of this Note is to point out that such claims are unfounded: the 'folk-lore' is essentially correct. Oswald's basic model can be summarised as follows. The union wishes to maximise the expression
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