The codetermined firm in a Cournot duopoly: A stability analysis

Luciano Fanti and Luca Gori ()

Economic Modelling, 2012, vol. 29, issue 4, 1242-1247

Abstract: This paper aims to 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 when the wage is fairly (high) low, while under profit maximisation a rise in wages always acts as a stabilising device because the parametric stability region monotonically increases with the wage in such a case. Moreover, a rise in the union's bargaining power has a de-stabilising effect, except when the wage is low and the firm power is already high. Therefore, under codetermination a change either in the wage or firm power in the Nash bargaining plays an ambiguous role on stability. We also show with numerical simulations that complex dynamics can also occur.

Keywords: Bifurcation; Codetermination; Cournot; Duopoly; Employment (search for similar items in EconPapers)
JEL-codes: C62 D43 L13 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: The codetermined firm in a Cournot duopoly: a stability analysis (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:29:y:2012:i:4:p:1242-1247

DOI: 10.1016/j.econmod.2012.04.015

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