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Equilibrium Mode of Competition in Unionized Oligopolies: Do Unions Act as Commitment Devices to Cournot Outcomes?

Constantine Manasakis () and Minas Vlassis ()

No 603, Working Papers from University of Crete, Department of Economics

Abstract: In contrast with previous studies, we postulate that there is no ex-ante commitment over the type of contract (i.e., price or quantity) which a firm offers consumers. In the context of a unionized symmetric duopoly we instead argue that the mode of competition which in equilibrium emerges is the one that entails the most beneficial outcome for both the firm and its labour union, in each firm/union pair, given the choice of the rival pair. Our findings suggest that monopoly unions with risk-averse/neutral members may effectively act as commitment devices driving firms to the symmetric Cournot mode of competition.

Keywords: Oligopoly; Monopoly unions; Equilibrium mode of competition (search for similar items in EconPapers)
JEL-codes: D43 J51 L13 (search for similar items in EconPapers)
Pages: 15 pages
Date: 2006-03
New Economics Papers: this item is included in nep-bec, nep-com and nep-mic
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http://economics.soc.uoc.gr/wpa/docs/Manasakis-Vlassis_Unions_Mode_of_Comp.pdf First version, 2006 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:crt:wpaper:0603

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