The Cournot-Bertrand profit differential: A reversal result in a differentiated duopoly with wage bargaining
UNSPECIFIED. (2004) The Cournot-Bertrand profit differential: A reversal result in a differentiated duopoly with wage bargaining. EUROPEAN ECONOMIC REVIEW, 48 (3). pp. 681-696. ISSN 0014-2921Full text not available from this repository.
Official URL: http://dx.doi.org/10.1016/S0014-2921(02)00326-4
This paper compares Cournot and Bertrand equilibria in a downstream differentiated duopoly in which the input price (wage) paid by each downstream firm is the outcome of a strategic bargain with its upstream supplier (labor union). We show that the standard result that Cournot equilibrium profits exceed those under Bertrand competition - when the differentiated duopoly game is played in imperfect substitutes - is reversible. Whether equilibrium profits are higher under Cournot or Bertrand competition is shown to depend upon the nature of the upstream agents' preferences and on the distribution of bargaining power over the input price. We find that the standard result holds unless unions are both powerful and place considerable weight on the wage argument in their utility function. (C) 2003 Elsevier B.V. All rights reserved.
|Item Type:||Journal Article|
|Subjects:||H Social Sciences > HC Economic History and Conditions|
|Journal or Publication Title:||EUROPEAN ECONOMIC REVIEW|
|Publisher:||ELSEVIER SCIENCE BV|
|Official Date:||June 2004|
|Number of Pages:||16|
|Page Range:||pp. 681-696|
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