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<p>This paper revisits the classic Cournot–Bertrand profit differential in a differentiated duopoly with firm-specific labor unions. Departing from the standard assumption of rent-maximizing unions, we introduce a new dimension by modelling unions that institutionalize workers’ fairness concerns. These concerns are formalized along two distinct, empirically grounded arguments: vertical fairness concerns (VFC), where unions care about the intra-firm distribution of surplus between labor (wage bill) and capital (profits); and horizontal fairness concerns (HFC), where unions engage in inter-firm wage comparisons driven by envy/pride. The intensity of each concern reshapes the union’s utility function from simple rent extraction to a more complex objective that includes relative payoff comparisons.</p>

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The Cournot–Bertrand Profit Differential: A Reversal Result in a Differentiated Duopoly with Unions’ Fairness Concerns

  • 期刊论文

  • 发表日期：

    2026年4月15日

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  • Domenico Buccella,
  • Luciano Fanti,
  • Luca Gori

摘要

This paper revisits the classic Cournot–Bertrand profit differential in a differentiated duopoly with firm-specific labor unions. Departing from the standard assumption of rent-maximizing unions, we introduce a new dimension by modelling unions that institutionalize workers’ fairness concerns. These concerns are formalized along two distinct, empirically grounded arguments: vertical fairness concerns (VFC), where unions care about the intra-firm distribution of surplus between labor (wage bill) and capital (profits); and horizontal fairness concerns (HFC), where unions engage in inter-firm wage comparisons driven by envy/pride. The intensity of each concern reshapes the union’s utility function from simple rent extraction to a more complex objective that includes relative payoff comparisons.