Efficiency Wages in Cournot-Oligopoly

Marco de Pinto () and Laszlo Goerke
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Marco de Pinto: Institute for Labour Law and Industrial Relations in the European Union (IAAEU), Trier University, Behringstr. 21, D-54296Trier, Germany

The B.E. Journal of Economic Analysis & Policy, 2019, vol. 19, issue 4, 13

Abstract: In a Cournot-oligopoly with free but costly entry and business stealing, output per firm is too low and the number of competitors excessive, assuming labor productivity to depend on the number of employees only or to be constant. However, a firm can raise the productivity of its workforce by paying higher wages. We show that such efficiency wages accentuate the distortions occurring in oligopoly. Specifically, excessive entry is aggravated and the welfare loss due to market power rises.

Keywords: oligopoly; efficiency wages; excessive entry; welfare (search for similar items in EconPapers)
JEL-codes: D43 J31 L13 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Efficiency Wages in Cournot-Oligopoly (2019)
Working Paper: Efficiency Wages in a Cournot-Oligopoly (2018)
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DOI: 10.1515/bejeap-2018-0236

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