Welfare‐enhancing Trade Unions in an Oligopoly with Excessive Entry

Marco de Pinto and Laszlo Goerke

Manchester School, 2020, vol. 88, issue 1, 60-90

Abstract: Trade unions are often argued to cause allocative inefficiencies and to lower welfare. We analyze whether this evaluation is also justified in a Cournot‐oligopoly with free but costly entry. If input markets are competitive and output per firm declines with the number of firms (business stealing), there is excessive entry into such oligopoly. If trade unions raise wages above the competitive level, output and profits per firm decline, which could deter entry and thus improve welfare. We find that an increase in the union’s bargaining power raises welfare if the (inverse) demand curve is (sufficiently) concave. We also show that collective bargaining loosens the linkage between business stealing and excessive entry.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
https://doi.org/10.1111/manc.12288

Related works:
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)
Working Paper: Welfare-enhancing Trade Unions in an Oligopoly with Excessive Entry (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:manchs:v:88:y:2020:i:1:p:60-90

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=1463-6786

Access Statistics for this article

Manchester School is currently edited by Keith Blackburn

More articles in Manchester School from University of Manchester Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().