Efficient bargaining versus right to manage: a stability analysis with heterogeneous players in a duopoly with quantity competition and trade unions

Luciano Fanti and Luca Gori ()

MPRA Paper from University Library of Munich, Germany

Abstract: The present study considers a unionised duopoly with the two most popular labour market institutions, i.e. efficient bargaining (EB) and right to manage (RTM) unions and analyses product market stability under quantity competition. By focusing on the role played by labour market institutions on the market dynamics, we show that when the preference of unions towards wages is fairly low, (i) the stability region under RTM is higher than under EB, and (ii) a rise in the union power in the Nash bargaining monotonically increases (reduces) the parametric stability region under RTM (EB). In contrast, when the preference of unions towards wages becomes higher, an increase in the union’s bargaining power acts: (1) as an economic stabiliser when the union power is still low; (2) as an economic de-stabiliser when the union power is already high. These results shed some light on the effects of how labour market structures affect out-of equilibrium behaviours in a duopoly in addition to the many established results on how they affect equilibrium behaviours in such a context, and thus also constitute policy warnings for the design of the labour market institutions as regards the important issue of economic stability.

Keywords: Bifurcation; Cournot; Duopoly; Efficient bargaining; Right to manage (search for similar items in EconPapers)
JEL-codes: C62 D43 J51 L13 (search for similar items in EconPapers)
Date: 2011-11-01
New Economics Papers: this item is included in nep-bec and nep-gth
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/34434/1/MPRA_paper_34434.pdf original version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:34434

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().