This paper compares two alternative incentive schemes, performance-related pay (PRP) and relative performance evaluation (RPE), in a differentiated duopoly where institutional features constrain firms to pay workers a given salary. It is shown that RPE endogenously arises as the optimal choice...

This paper analyses the effects of a downstream merger in a differentiated duopoly under price competition and plant-specific unions. We show, in contrast with the preceding literature, that the standard welfare results may be reversed: a downstream merger may increase consumer surplus and...

Can a merger from duopoly to monopoly be detrimental for profits? This paper deals with this issue by focusing on the interaction between decreasing returns to labour (which imply firms’ convex production costs) and centralised unionisation in a differentiated duopoly model. It is pointed out...

This paper analyses the effects of a downstream merger in a differentiated duopoly under price competition and firm-specific unions. In contrast with the acquired wisdom, we show that a downstream merger may increase overall welfare when products are sufficienly substitutes and unions are...

In this paper, we aim at investigating if the conventional wisdom, that an increase of competition linked to a decrease in the degree of product differentiation always reduces firms’ profits, remains true in a unionized duopoly model with labour decreasing returns. In this context, mixed...

Can a merger from duopoly to monopoly be detrimental for profits? This paper deals with this issue by focusing on the interaction between decreasing returns to labour (which imply firms’ convex costs) and centralised unionisation. Firstly, it is highlighted that a wage “non-rigidity”...

This paper studies how unionisation structures that differ in the de-gree of wage setting centralisation interplay with the strategic choice of production capacity by firms and how this affects product market outcomes. When labour markets are unionised and firms compete in quantities, they...

This paper studies the dynamic interaction between product market competition and incentives against shirking. It is shown that efficiency wages can both increase and decrease when competition becomes fiercer. Instead, discretionary bonuses do not vary with competition but there exists an upper...