Stability in a Cournot duopoly under asymmetric unionism
AbstractWe analyse the stability issue in a Cournot duopoly with heterogeneous players. We show that labour market institutions matter for the stability of the unique interior Cournot-Nash equilibrium. Interestingly, the role played by the existence of firm-specific unions on stability, when the degree of unionism is asymmetric between the two firms, is at all different depending on whether the unionised firm has bounded rational or naive expectations. Indeed, a shift in the union’s preference from employment towards wages acts as an economic (de)stabiliser when workers are paid with the (competitive) unionised wage by the bounded rational firm and with the (unionised) competitive wage by the naïve firm.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 33694.
Date of creation: 24 Sep 2011
Date of revision:
Bifurcation; Cournot; Heterogeneous expectations; Monopoly union;
Other versions of this item:
- Luciano Fanti & Luca Gori, 2011. "Stability in a Cournot duopoly under asymmetric unionism," Discussion Papers 2011/123, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-01 (All new papers)
- NEP-BEC-2011-10-01 (Business Economics)
- NEP-COM-2011-10-01 (Industrial Competition)
- NEP-LAB-2011-10-01 (Labour Economics)
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