While the received literature analyzing the Cournot -Bertrand profit ranking under unionized duopolies emphasized the key role of the strategic effects induced by firms specific unions competition in determining the "reversal result" (i.e. higher profits under Bertrand competition), in this paper the issue is studied in a framework with labour decreasing returns and a centralized (industry -wide) union, hence in a context where inter-union competition is clearly absent. Nevertheless, it is shown that the reversal result can apply provided that the union is sufficiently wage oriented. Furthermore, it is pointed out that, in the special case of total wage bill maximizing union, the reversal result applies for a larger range of the degree of product substitutability under a central union rather than under firm-specific unions.
Labour decreasing returns, industry-wide union and Cournot-Bertrand profit ranking. A note
FANTI, LUCIANO;MECCHERI, NICOLA
2012-01-01
Abstract
While the received literature analyzing the Cournot -Bertrand profit ranking under unionized duopolies emphasized the key role of the strategic effects induced by firms specific unions competition in determining the "reversal result" (i.e. higher profits under Bertrand competition), in this paper the issue is studied in a framework with labour decreasing returns and a centralized (industry -wide) union, hence in a context where inter-union competition is clearly absent. Nevertheless, it is shown that the reversal result can apply provided that the union is sufficiently wage oriented. Furthermore, it is pointed out that, in the special case of total wage bill maximizing union, the reversal result applies for a larger range of the degree of product substitutability under a central union rather than under firm-specific unions.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
