Union-Oligopoly Bargaining and Entry Deterrence:A Reassessment of Limit Pricing

Rupayan Pal () and Bibhas Saha

Working Papers from eSocialSciences

Abstract: This paper introduces wage bargaining in the framework of Milgrom and Roberts where the workers' reservation wage is the relevant information parameter critical for entry. The authors show that entry threat signi cantly distorts the wage, which in turn adversely a ects the rm's ability to signal through price. Consequently, the separating equilibrium (in price) does not always exist. Instead, the authors get a semi-separating equilibrium. Pooling equilibrium may not also exist. If, however, wage agreements can be made public, signalling occurs with or without distortions in the full information wages. Pooling equilibrium in wage also exists. The paper also examines whether wage or price is the preferred signalling device, and whether wage agreements should be made public or not. [WP no. 14].

Keywords: labor union; information parameter; Entry; Bargaining; signalling; Wage; Union-oligopoly; price; MR; equilibrium; pricing; labor; correlation; marginal cost; product markets. (search for similar items in EconPapers)
Date: 2008-02
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

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Journal Article: Union-oligopoly bargaining and entry deterrence: a reassessment of limit pricing (2008)
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