Endogenous timing under price competition and unions. (English) Zbl 1398.91400

Fanti, Luciano

Int. J. Econ. Theory 12, No. 4, 401-413 (2016).

Summary: We investigate the endogenous order of moves in a duopoly under price competition with a unionized labor market. We show that the established results are not robust to the presence of unions. We find that when product substitutability is sufficiently high and unions are sufficiently wage-interested the sub-perfect equilibrium is the simultaneous choice of prices by firms (in sharp contrast to the received literature) and, moreover, the well-known result that in price games there is always a preference for being a follower no longer holds true under unionization.

MSC:

91B54	Special types of economic markets (including Cournot, Bertrand)
91B40	Labor market, contracts (MSC2010)
91A18	Games in extensive form

Keywords:

endogenous timing; union; Bertrand duopoly