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Abstract

We analyse the stability issue in a Cournot duopoly with heterogeneous players. We show that labour market institutions matter for the stability of the unique interior Cournot-Nash equilibrium. Interestingly, the role played by the existence of firm-specific unions on stability, when the degree of unionism is asymmetric between the two firms, is at all different depending on whether the unionised firm has bounded rational or naive expectations. Indeed, a shift in the union’s preference from employment towards wages acts as an economic destabiliser when workers are paid with the competitive unionised wage by the bounded rational firm and with the unionised competitive wage by the naïve firm.



Item Type: MPRA Paper -

Original Title: Stability in a Cournot duopoly under asymmetric unionism-

English Title: Stability in a Cournot duopoly under asymmetric unionism-

Language: English-

Keywords: Bifurcation; Cournot; Heterogeneous expectations; Monopoly union-

Subjects: J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J51 - Trade Unions: Objectives, Structure, and EffectsL - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect MarketsD - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market ImperfectionC - Mathematical and Quantitative Methods > C6 - Mathematical Methods ; Programming Models ; Mathematical and Simulation Modeling > C62 - Existence and Stability Conditions of Equilibrium-





Author: Fanti, Luciano

Source: https://mpra.ub.uni-muenchen.de/33694/







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