Fanti, Luciano and Gori, Luca (2011): The codetermined firm in a Cournot duopoly: a stability analysis.
Download (161kB) | Preview
We study the stability issue in a Cournot duopoly with codetermined firms. We show that when both firms codetermine employment together with decentralised employees’ representatives, a rise in wages acts as an economic de-stabiliser (stabiliser) when the wage is fairly low (high), while under profit maximisation a rise in wages always stabilises the market equilibrium. Moreover, increasing the union’s bargaining power has a de-stabilising effect, except when the wage is low and the firm’s power is already high.
|Item Type:||MPRA Paper|
|Original Title:||The codetermined firm in a Cournot duopoly: a stability analysis|
|English Title:||The codetermined firm in a Cournot duopoly: a stability analysis|
|Keywords:||Bifurcation; Codetermination; Cournot; Duopoly; Employment|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection
C - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium
|Depositing User:||Luca Gori|
|Date Deposited:||16. Oct 2011 16:38|
|Last Modified:||16. Feb 2013 06:54|
Bischi, G.I., Kopel, M., 2001. Equilibrium selection in a nonlinear duopoly game with adaptive expectations. Journal of Economic Behavior & Organization 46, 73–100.
Bischi, G.I., Chiarella, C., Kopel, M., Szidarovszky, F., 2010. Nonlinear Oligopolies. Stability and Bifurcations. Berlin: Springer-Verlag.
Bughin, J., 1995. Unions and strategic managerial incentives. Economics Letters 47, 95–100.
Correa-López, M., Naylor, R.A., 2004. The Cournot-Bertrand profit differential: a reversal result in a differentiated duopoly with wage bargaining. European Economic Review 48, 681–696.
Cournot, A., 1838. Recherches sur les Principes Mathématiques de la Théorie des Richessess. Paris: Hachette.
Den Haan, W.J., 2001. The importance of the number of different agents in a heterogeneous asset-pricing model. Journal of Economic Dynamics and Control 25, 721–746.
Dixit, A.K., 1986. Comparative statics for oligopoly. International Economic Review 27, 107–122.
Dowrick, S., 1989. Union-oligopoly bargaining. Economic Journal 99, 1123–1142.
Dowrick, S., 1990. The relative profitability of the Nash-bargaining on the labor demand curve or the contract curve. Economics Letters 33, 121–125.
Fanti, L., Meccheri, N., 2011. The Cournot-Bertrand profit differential in a differentiated duopoly with unions and labour decreasing returns. Economics Bulletin 31, 233–244.
Kraft, K., 1998. The codetermined firm in oligopoly. Economics Letters 61, 195–201.
Puu, T., 1998. The chaotic duopolists revisited. Journal of Economic Behavior & Organization 33, 385–394.
Tramontana, F., 2010. Heterogeneous duopoly with isoelastic demand function. Economic Modelling 27, 350–357.