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Economies 2014, 2(2), 95-108; doi:10.3390/economies2020095

Union Bargaining in an Oligopoly Market with Cournot-Bertrand Competition: Welfare and Policy Implications

Department of Economics, Oregon State University, Corvallis, OR, 97331-3612, USA
* Author to whom correspondence should be addressed.
Received: 6 January 2014 / Revised: 11 February 2014 / Accepted: 10 March 2014 / Published: 25 March 2014
(This article belongs to the Special Issue Game Theory and Political Economy)
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We investigate the welfare effect of union activity in a relatively new oligopoly model, the Cournot-Bertrand model, where one firm competes in output (a la Cournot) and the other firm competes in price (a la Bertrand). The Nash equilibrium prices, outputs, and profits are quite diverse in this model, with the competitive advantage going to the Cournot-type competitor. A comparison of the results from the Cournot-Bertrand model with those found in the traditional Cournot and Bertrand models reveals that firms and the union have a different preference ordering over labor market bargaining. These differences help explain why the empirical evidence does not support any one model of union bargaining. We also examine the welfare and policy implications of union activity in a Cournot-Bertrand setting.
Keywords: Cournot-Bertrand model; union bargaining Cournot-Bertrand model; union bargaining
This is an open access article distributed under the Creative Commons Attribution License (CC BY 3.0).

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Schroeder, E.; Tremblay, V.J. Union Bargaining in an Oligopoly Market with Cournot-Bertrand Competition: Welfare and Policy Implications. Economies 2014, 2, 95-108.

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