Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/156146
Authors: 
De Pinto, Marco
Goerke, Laszlo
Year of Publication: 
2016
Series/Report no.: 
IAAEU Discussion Paper Series in Economics 03/2016
Abstract: 
If input markets are competitive and output per firm declines with the number of firms (business stealing effect), there will be excessive entry into a Cournot oligopoly for a homogeneous commodity. However, input markets are often imperfectly competitive and the price of labor is determined by collective bargaining. The resulting rise in wages reduces output and profits and can deter entry. We analyze under which conditions greater bargaining power by the trade union reduces entry and raises welfare. Furthermore, we show that collective bargaining loosens the linkage between business stealing and excessive entry.
Subjects: 
Endogenous Entry
Oligopoly
Trade Union
Wage Bargaining
Welfare
JEL: 
D43
J51
L13
Document Type: 
Working Paper

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