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Endogenous timing of managerial contracts in unionised oligopolies

Author

Listed:
  • Luciano Fanti

    () (Department of Economics and Management, University of Pisa, Italy)

  • Nicola Meccheri

    () (Department of Economics and Management, University of Pisa, Italy; The Rimini Centre for Economic Analysis, Italy)

Abstract

In a managerial duopoly with unionised labour markets, this paper analyses whether owners of firms prefer to decide on incentive contracts for their managers sequentially or simultaneously. When firms compete in quantities, firms' owners can prefer choosing incentive contracts simultaneously or sequentially, depending on the unions' relative bargaining power and the degree of product differentiation. Instead, when firms compete in prices, firms' owners choose incentive contracts sequentially with substitute goods and simultaneously with complement goods. While the result under Bertrand confirms that obtained by the received literature in a framework where labour markets are competitive (non-unionised), the result under Cournot is distinctly different.

Suggested Citation

  • Luciano Fanti & Nicola Meccheri, 2016. "Endogenous timing of managerial contracts in unionised oligopolies," Working Paper series 16-19, Rimini Centre for Economic Analysis.
  • Handle: RePEc:rim:rimwps:16-19
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    References listed on IDEAS

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    More about this item

    Keywords

    endogenous timing; managerial contracts; unionised oligopoly;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • 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

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