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

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