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Profit sharing and strike activity in Cournot oligopoly

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Mauleon, Ana [FUSL] Vannetelbosch, Vincent [UCL]

Within an incomplete-information framework. we develop a model of wage determination in a unionized Cournot oligopoly. The assumption of incomplete information allows the possibility of strikes or lockouts, which waste industry potential resources, at equilibrium. Facing such deadweight loss, the government or the social planner may decide to adopt a policy, such as a profit-sharing scheme. Under two different bargaining structures (firm level vs. industry level), we investigate the effects of adopting profit sharing on the wage outcome and the strike activity. If the base-wage bargaining takes place at the industry level, then the introduction of a profit-sharing scheme increases the strike activity. But if the base-wage bargaining takes place at the firm level and the number of firms in the industry is greater than two, then the introduction of a profit-sharing scheme reduces the strike activity.

Document type Article de périodique (Journal article) – Article de recherche
Access type Accès libre
Publication date 1999
Language Anglais
Journal information "Journal of Economics" - Vol. 69, no. 1, p. 19-40 (1999)
Peer reviewed yes
Publisher Springer-verlag Wien (Vienna)
issn 0931-8658
Publication status Publié
Affiliations USL-B - Centre de Recherche en Economie (CEREC)
UCL - EUEN/CORE - Center for operations research and econometrics
Keywords Cournot oligopoly ; wage bargaining ; profit sharing ; incomplete information ; strike activity
Links
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Bibliographic reference Mauleon, Ana ; Vannetelbosch, Vincent. Profit sharing and strike activity in Cournot oligopoly. In: Journal of Economics, Vol. 69, no. 1, p. 19-40 (1999)
Permanent URL http://hdl.handle.net/2078.1/44806