Welfare-Enhancing Trade Unions in an Oligopoly with Excessive Entry

Marco de Pinto () and Laszlo Goerke
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Marco de Pinto: Institute for Labour Law and Industrial Relations in the EU, University of Trier

No 201603, IAAEU Discussion Papers from Institute of Labour Law and Industrial Relations in the European Union (IAAEU)

Abstract: If input markets are competitive and output per firm declines with the number of firms (business stealing effect), there will be excessive entry into a Cournot oligopoly for a homogeneous commodity. However, input markets are often imperfectly competitive and the price of labor is determined by collective bargaining. The resulting rise in wages reduces output and profits and can deter entry. We analyze under which conditions greater bargaining power by the trade union reduces entry and raises welfare. Furthermore, we show that collective bargaining loosens the linkage between business stealing and excessive entry.

Keywords: Endogenous Entry; Oligopoly; Trade Unions; Wage Bargaining; Welfare (search for similar items in EconPapers)
JEL-codes: D43 J51 L13 (search for similar items in EconPapers)
Date: 2016-03
New Economics Papers: this item is included in nep-bec and nep-com
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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http://www.iaaeu.de/images/DiscussionPaper/2016_03.pdf First version, 2016 (application/pdf)

Related works:
Journal Article: Welfare‐enhancing Trade Unions in an Oligopoly with Excessive Entry (2020)
Working Paper: Welfare-enhancing trade unions in an oligopoly with excessive entry (2019)
Working Paper: Welfare-enhancing Trade Unions in an Oligopoly with Excessive Entry (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:iaa:dpaper:201603

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