Advanced Search
MyIDEAS: Login to save this paper or follow this series

Comparing Cournot and Bertrand Competition in a Unionized Mixed Duopoly

Contents:

Author Info

  • Choi, Kangsik

Abstract

We investigate a differentiated mixed duopoly in which private and public firms can choose to strategically set prices or quantities by facing a union bargaining process. For the case of a unionized mixed duopoly, only the public firm is able to choose a type of contract irrespective of whether the goods are substitutes or complements in the equilibrium. Thus, we show that social welfare under Bertrand competition is always determined by the public firm's dominant strategy, wherein the Bertrand competition entails higher social welfare than the Cournot competition. Moreover, there are multiple Nash equilibria in the contract stage of the game. Finally, our main results hold irrespective of the nature of goods, with the exception of when a sufficiently large parameter of complements is employed, the ranking of private firm's profit is not reversed, which is contrast to the standard findings.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/15468/
File Function: original version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 15468.

as in new window
Length:
Date of creation: 25 Sep 2008
Date of revision: 27 May 2009
Handle: RePEc:pra:mprapa:15468

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: Wage Bargaining; Union; Cournot-Bertrand Competition; Mixed Duopoly.;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

References listed on IDEAS
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.:
as in new window
  1. Naylor, Robin A., 2002. "Industry profits and competition under bilateral oligopoly," Economics Letters, Elsevier, Elsevier, vol. 77(2), pages 169-175, October.
  2. Zhao, Laixun, 1995. "Cross-hauling direct foreign investment and unionized oligopoly," European Economic Review, Elsevier, Elsevier, vol. 39(6), pages 1237-1253, June.
  3. Leahy, D. & Montagna, C., 1999. "Unionisation and Foreign Direct Investment: Challenging Conventional Wisdom?," Papers, College Dublin, Department of Political Economy- 99/15, College Dublin, Department of Political Economy-.
  4. Yuanzhu Lu & Sougata Poddar, 2004. "The Choice of Capacity in Mixed Duopoly under Demand Uncertainty," CEMA Working Papers, China Economics and Management Academy, Central University of Finance and Economics 507, China Economics and Management Academy, Central University of Finance and Economics.
  5. Ishida, Junichiro & Matsushima, Noriaki, 2009. "Should civil servants be restricted in wage bargaining? A mixed-duopoly approach," Journal of Public Economics, Elsevier, Elsevier, vol. 93(3-4), pages 634-646, April.
  6. Haucap, Justus & Wey, Christian, 2003. "Unionisation Structures and Innovation Incentives," Working Paper, Helmut Schmidt University, Hamburg 21/2003, Helmut Schmidt University, Hamburg.
  7. Piercarlo Zanchettin, 2006. "Differentiated Duopoly with Asymmetric Costs," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 15(4), pages 999-1015, December.
  8. Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, Elsevier, vol. 42(7), pages 1251-1267, July.
  9. Haskel, Jonathan & Sanchis, Amparo, 1995. "Privatisation and X-Inefficiency: A Bargaining Approach," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 43(3), pages 301-21, September.
  10. De Fraja, Giovanni, 1993. "Unions and Wages in Public and Private Firms: A Game-Theoretic Analysis," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 457-69, July.
  11. Amir, Rabah & Jin, Jim Y., 2001. "Cournot and Bertrand equilibria compared: substitutability, complementarity and concavity," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 19(3-4), pages 303-317, March.
  12. Haskel, Jonathan & Szymanski, Stefan, 1993. "Privatization, Liberalization, Wages and Employment: Theory and Evidence for the UK," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 60(238), pages 161-81, May.
  13. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, Elsevier, vol. 70(3), pages 473-483, December.
  14. Noriaki Matsushima & Toshihiro Matsumura, 2003. "Mixed oligopoly and spatial agglomeration," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 36(1), pages 62-87, February.
  15. Lorenz NETT, 1993. "Mixed Oligopoly With Homogeneous Goods," Annals of Public and Cooperative Economics, Wiley Blackwell, Wiley Blackwell, vol. 64(3), pages 367-393, 07.
  16. Leonard Cheng, 1985. "Comparing Bertrand and Cournot Equilibria: A Geometric Approach," RAND Journal of Economics, The RAND Corporation, vol. 16(1), pages 146-152, Spring.
  17. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, Springer, vol. 84(1), pages 27-48, 02.
  18. Dastidar, Krishnendu Ghosh, 1997. "Comparing Cournot and Bertrand in a Homogeneous Product Market," Journal of Economic Theory, Elsevier, Elsevier, vol. 75(1), pages 205-212, July.
  19. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  20. Toshihiro Matsumura & Noriaki Matsushima, 2004. "Endogenous Cost Differentials between Public and Private Enterprises: A Mixed Duopoly Approach," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 71(284), pages 671-688, November.
  21. repec:ebl:ecbull:v:4:y:2008:i:8:p:1-7 is not listed on IDEAS
  22. Schmidt, Klaus M., 1996. "The costs and benefits of privatization: An incomplete contracts approach," Munich Reprints in Economics, University of Munich, Department of Economics 19773, University of Munich, Department of Economics.
  23. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April.
  24. Skaksen, Mette Yde & Sorensen, Jan Rose, 2001. "Should trade unions appreciate foreign direct investment," Journal of International Economics, Elsevier, Elsevier, vol. 55(2), pages 379-390, December.
  25. Oswald, Andrew J & Turnbull, Peter J, 1985. "Pay and Employment Determination in Britain: What Are Labour," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 1(2), pages 80-97, Summer.
  26. Kjell Erik Lommerud & Frode Meland & Lars Sørgard, 2002. "Unionized Oligopoly, Trade Liberalization and Location Choice," CESifo Working Paper Series 777, CESifo Group Munich.
  27. Straume, Odd Rune, 2003. "International mergers and trade liberalisation: implications for unionised labour," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(5), pages 717-735, May.
  28. de Fraja, Giovanni & Delbono, Flavio, 1990. " Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 4(1), pages 1-17.
  29. Juan Bárcena-Ruiz, 2007. "Endogenous Timing in a Mixed Duopoly: Price Competition," Journal of Economics, Springer, Springer, vol. 91(3), pages 263-272, July.
  30. Constantine Manasakis & Minas Vlassis, 2006. "Equilibrium Mode of Competition in Unionized Oligopolies: Do Unions Act as Commitment Devices to Cournot Outcomes?," Working Papers, University of Crete, Department of Economics 0603, University of Crete, Department of Economics.
  31. Qiu, Larry D., 1997. "On the Dynamic Efficiency of Bertrand and Cournot Equilibria," Journal of Economic Theory, Elsevier, Elsevier, vol. 75(1), pages 213-229, July.
  32. Arijit Mukherjee & Kullapat Suetrong, . "Unionisation structure and strategic foreign direct investment," Discussion Papers 07/22, University of Nottingham, GEP.
  33. X. Henry Wang, 2008. "Price and Quantity Competition Revisited," Economics Bulletin, AccessEcon, vol. 4(8), pages 1-7.
  34. Mónica Correa-López, 2007. "Price and Quantity Competition in a Differentiated Duopoly with Upstream Suppliers," Journal of Economics & Management Strategy, Wiley Blackwell, Wiley Blackwell, vol. 16(2), pages 469-505, 06.
  35. Okuguchi, Koji, 1987. "Equilibrium prices in the Bertrand and Cournot oligopolies," Journal of Economic Theory, Elsevier, Elsevier, vol. 42(1), pages 128-139, June.
  36. Lopez, Monica Correa & Naylor, Robin A., 2004. "The Cournot-Bertrand profit differential: A reversal result in a differentiated duopoly with wage bargaining," European Economic Review, Elsevier, Elsevier, vol. 48(3), pages 681-696, June.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Kangsik, Choi, 2011. "Cournot and Bertrand competition with asymmetric costs in a mixed duopoly," MPRA Paper 34100, University Library of Munich, Germany.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:15468. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.