Efficiency Wages in a 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
No 201807, IAAEU Discussion Papers from Institute of Labour Law and Industrial Relations in the European Union (IAAEU)
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)
New Economics Papers: this item is included in nep-bec, nep-com and nep-lma
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Working Paper: Efficiency Wages in Cournot-Oligopoly (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:iaa:dpaper:201807
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