Entry Threats, and Inefficiency in Ã¢â‚¬ËœEfficient BargainingÃ¢â‚¬â„¢
AbstractWe examine whether the outcome of bargaining over wage and employment between an incumbent firm and a union remains efficient under entry threat. The workers\' reservation wage is not known to the entrant, and entry is profitable only against the high reservation wage. The entrant observes the pre-entry price, but not necessarily the wage agreements. When wage is not observed, contracts feature over-employment. Under separating equilibrium the low type is over-employed, and under pooling equilibrium the high type is over-employed. But when wage is observed, pooling equilibrium may not always exist, and separating equilibrium does not involve any inefficiency.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Labor Economics Working Papers with number 23020.
Date of creation: Jan 2010
Date of revision:
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Postal: JG Crawford Building #13, Asia Pacific School of Economics and Government, Australian National University, ACT 0200
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More information through EDIRC
Efficient Bargaining; Entry Threat; Signalling; Inefficiency;
Find related papers by JEL classification:
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- J58 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Public Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Mathias Dewatripont, 1988.
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- Mathias Dewatripont, 1988. "The impact of trade unions on incentives to deter entry," ULB Institutional Repository 2013/9571, ULB -- Universite Libre de Bruxelles.
- Ohnishi, Kazuhiro, 2001. "Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand," Australian Economic Papers, Wiley Blackwell, Wiley Blackwell, vol. 40(1), pages 30-43, March.
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