Welfare-enhancing trade unions in an oligopoly with excessive entry

Arbeitspapier

If input markets are competitive and output per firm declines with the number of firms (business stealing effect), there will be excessive entry into a Cournot oligopoly for a homogeneous commodity. However, input markets are often imperfectly competitive and the price of labor is determined by collective bargaining. The resulting rise in wages reduces output and profits and can deter entry. We analyze under which conditions greater bargaining power by the trade union reduces entry and raises welfare. Furthermore, we show that collective bargaining loosens the linkage between business stealing and excessive entry.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IAAEU Discussion Paper Series in Economics ; No. 03/2016

Classification and Topics

• Classification: Wirtschaft ; Market Structure, Pricing, and Design: Oligopoly and Other Forms of Market Imperfection ; Trade Unions: Objectives, Structure, and Effects ; Oligopoly and Other Imperfect Markets
• Subject: Endogenous Entry ; Oligopoly ; Trade Union ; Wage Bargaining ; Welfare

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): De Pinto, Marco ; Goerke, Laszlo
• Event: Veröffentlichung
• (who): University of Trier, Institute for Labour Law and Industrial Relations in the European Union (IAAEU)
• (where): Trier
• (when): 2016

Further information

• Handle: http://hdl.handle.net/10419/156146