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Profit-sharing, bertrand competition and monopoly unions : a note

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  • Dhillon, Amrita
  • Petrakis, Emmanuel

Abstract

This paper studies a strategic aspect of profit-sharing in an oligopolistic industry with a monopoly union. Whenever a uniform profit share exists in the industry, we show that a union that values the per worker remuneration positively, may have incentives to reduce industry employment, decreasing thus total output and causing total profits to increase. Thus, we show that profit-sharing may lead to higher profits for such an industry even if productivity effects are absent.

Suggested Citation

  • Dhillon, Amrita & Petrakis, Emmanuel, 2001. "Profit-sharing, bertrand competition and monopoly unions : a note," The Warwick Economics Research Paper Series (TWERPS) 612, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:612
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    References listed on IDEAS

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    1. Mathias Dewatripont, 1988. "Commitment Through Renegotiation-Proof Contracts with Third Parties," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 55(3), pages 377-390.
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    Cited by:

    1. Domenico Buccella, 2016. "Profit sharing as entry deterrence mechanism," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 15(1), pages 17-31, April.

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    More about this item

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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