Wage Commitment, Signalling, and Entry Deterrence or Accommodation
AbstractWe analyse the wage choice of a monopoly union against entry threat. The wage carries information about market demand, which is crucial to an uninformed entrant, and in addition affects the entrant's post-entry cost through labour market institutions. The union may wish to deter or accommodate entry depending on whether the entrant will hire from a different source or from the union. Equilibrium wage is distorted downwardly (upwardly) for deterrence (accommodation); but because of wage correlation a low (high) wage can also turn entry profitable (unprofitable). Therefore, separating equilibrium may not always exist, and entry outcomes may be inefficient. Copyright 2006 The Authors. Journal compilation CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd. 2006.
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Bibliographic InfoArticle provided by CEIS in its journal LABOUR.
Volume (Year): 20 (2006)
Issue (Month): 4 (December)
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- Rupayan Pal & Bibhas Saha, 2008. "Union-Oligopoly Bargaining and Entry Deterrence:A Reassessment of Limit Pricing," Working Papers id:1375, eSocialSciences.
- Rupayan Pal & Bibhas Saha, 2010. "Entry Threats and Inefficiency in â€˜Efficient Bargainingâ€™," Working Papers id:2833, eSocialSciences.
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