Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Wednesday, November 9, 2011

Stability in a Cournot duopoly under asymmetric unionism

Posted by D. Danie Sokol

Luciano Fanti (University of Pisa) and Luca Gori (University of Genoa) discuss Stability in a Cournot duopoly under asymmetric unionism.

ABSTRACT: We analyse the stability issue in a Cournot duopoly with heterogeneous players. We show that labour market institutions matter for the stability of the unique interior Cournot-Nash equilibrium. Interestingly, the role played by the existence of firm-specific unions on stability, when the degree of unionism is asymmetric between the two firms, is at all different depending on whether the unionised firm has bounded rational or naive expectations. Indeed, a shift in the union’s preference from employment towards wages acts as an economic (de)stabiliser when workers are paid with the (competitive) unionised wage by the bounded rational firm and with the (unionised) competitive wage by the naive firm.

http://lawprofessors.typepad.com/antitrustprof_blog/2011/11/stability-in-a-cournot-duopoly-under-asymmetric-unionism-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef015435e81138970c

Listed below are links to weblogs that reference Stability in a Cournot duopoly under asymmetric unionism :

Comments

Post a comment