Profits and competition in a unionized duopoly model with product differentiation and labour decreasing returns
AbstractIn this paper, we aim at investigating if the conventional wisdom, that an increase of competition linked to a decrease in the degree of product differentiation always reduces firms’ profits, remains true in a unionized duopoly model with labour decreasing returns. In this context, mixed results emerge. In particular, we show that a decrease in the degree of product differentiation may affect wages, hence profits, differently, depending on both the mode of competition in the product market Cournot or Bertrand competition) and the particular unionization structure (firm-specific or industry-wide union(s)). Interestingly, it is shown that the conventional wisdom can actually be reversed, even if under Bertrand competition only.
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Bibliographic InfoPaper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2012/133.
Date of creation: 01 Mar 2012
Date of revision:
unionized duopoly; labour decreasing returns; product differentiation; profits.;
Other versions of this item:
- Luciano Fanti & Nicola Meccheri, 2012. "Profits and Competition in a Unionized Duopoly Model with Product Differentiation and Labour Decreasing Returns," Working Paper Series 06_12, The Rimini Centre for Economic Analysis.
- J43 - Labor and Demographic Economics - - Particular Labor Markets - - - Agricultural Labor Markets
- J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-03 (All new papers)
- NEP-COM-2012-11-03 (Industrial Competition)
- NEP-IND-2012-11-03 (Industrial Organization)
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