Endogenous timing of managerial contracts in unionised oligopolies
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.
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