Efficiency Wages in Cournot-Oligopoly

Pinto, Marco de; Goerke, Laszlo

doi:10.1515/bejeap-2018-0236

Cited by 4 publications

(2 citation statements)

References 47 publications

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“…Since a zero-profit constraint governs entry and production costs reduce welfare, there is no rent impact on entry. de Pinto and Goerke (2019) investigate a world with efficiency wages. Once again, rent payments play no role and efficiency wages even aggravate excessive entry.…”

Section: Introductionmentioning

confidence: 99%

Informational rents and the excessive entry theorem: The case of hidden action^*

de Pinto,

Goerke,

Palermo

2023

Scottish J Political Eco

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Entry in a homogeneous Cournot‐oligopoly is excessive if there is business‐stealing. These findings assume that production costs reduce profits and welfare equally. If firms pay informational rents due to frictions in the employer–employee relationship, production costs partly reflect transfers, which do not alter welfare directly. We investigate the excessive entry theorem in the presence of rents. We find that informational rents can invalidate the theorem. Rents reduce profits and deter entry into the market equilibrium, while the socially optimal number of firms is not affected directly. The rent effect becomes stronger the lower the number of firms and can overcompensate the business‐stealing externality. As an example, we model a hidden action problem in which employees have an informational advantage after signing the contract with the firm. Insufficient entry occurs if entry costs are sufficiently high because they lower the number of firms and raise informational rents.

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Section: Introductionmentioning

confidence: 99%

Informational rents and the excessive entry theorem: The case of hidden action^*

de Pinto,

Goerke,

Palermo

2023

Scottish J Political Eco

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“…11For a representative sample, see Von Weizsäcker (1980), Suzumura and Kiyono (1987), Okuno‐Fujiwara and Suzumura (1993), Anderson et al (1995), Stähler and Upmann (2008), Mukherjee (2012a, 2012b), Amir et al (2014), Basak and Mukherjee (2016), De Pinto and Goerke (2019), and Cao and Wang (2020). …”

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confidence: 99%

Social efficiency of entry: Implications of network externalities

Basak

Petrakis

2021

Economics Manag Strategy

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We examine the welfare effects of entry in the presence of network externalities. We show that if network goods are fully incompatible, entry is socially insufficient as long as the entry cost is high, the goods are sufficiently differentiated, and the degree of network externality is low. Further, we show that as the degree of compatibility between the network goods increases, insufficient entry becomes more likely. Our findings provide policy guidelines for anticompetitive and procompetitive entry regulations.

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Social Efficiency of Entry in an Open Economy

Han

Haque

Mukherjee

2021

The B.E. Journal of Economic Analysis &Amp; Policy

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We show that cost asymmetry between the domestic and foreign firms is not necessary for the occurrence of insufficient entry in the domestic country. This result provides a rationale for pro-competitive domestic policies even in the absence of cost asymmetries among the domestic and foreign firms. However, if significant demand comes from foreign countries, and the market structures are determined endogenously in the domestic and foreign countries, domestic-entry in an open economy might not be insufficient, implying that foreign competition might not reduce the importance of anti-competitive domestic policies.

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Efficiency Wages in Cournot-Oligopoly

Cited by 4 publications

References 47 publications

Informational rents and the excessive entry theorem: The case of hidden action^*

Informational rents and the excessive entry theorem: The case of hidden action^*

Social efficiency of entry: Implications of network externalities

Social Efficiency of Entry in an Open Economy

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Efficiency Wages in Cournot-Oligopoly

Cited by 4 publications

References 47 publications

Informational rents and the excessive entry theorem: The case of hidden action*

Informational rents and the excessive entry theorem: The case of hidden action*

Social efficiency of entry: Implications of network externalities

Social Efficiency of Entry in an Open Economy

Contact Info

Product

Resources

About

Informational rents and the excessive entry theorem: The case of hidden action^*

Informational rents and the excessive entry theorem: The case of hidden action^*