Entry deterrence in a unionized oligopoly

Shingo Ishiguro, Yoshimasa Shirai

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

We investigate wage determination between an incumbent firm and its labour union under threat from another firm entering its product market. In equilibrium, it may be optimal for a labour union of the incumbent firm to lower its wage demand. This may make it possible for the incumbent firm to maintain a higher employment level, in that the lower wages can help the firm deter the entry of a rival firm. This will yield a higher profit for the incumbent firm and a lower utility level for the labour union compared with those in an equilibrium with no threat of entry.

Original languageEnglish
Pages (from-to)210-221
Number of pages12
JournalJapanese Economic Review
Volume49
Issue number2
DOIs
Publication statusPublished - 1998 Jan 1

ASJC Scopus subject areas

  • Economics and Econometrics

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