Vincent J. Vanneltelbosch
"Market competition and strike activity"
JEL codes: C78, L13, J31, J51, J52
Keywords: Bertrand competition, Cournot competition, product differentiation, wage bargaining, strike activity
Abstract: We develop a model of wage bargaining with private information in a duopoly. We investigate how product differentiation and market competition (Bertrand vs Cournot competition) affect wages and strikes. If bargaining takes place at the industry-level, then both the wage outcome and the strike activity do not depend on the degree of product differentiation whatever the type of market competition. However, if bargaining takes place at the firm-level, then wages and strikes are increasing with the degree of product differentiation, and the strike activity is smaller under Bertrand than under Cournot competition.