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Consider the following game between a union (player 1) and a monopolist (player 2). The union moves rst and sets wage w 2 0. The
Consider the following game between a union (player 1) and a monopolist (player 2). The union moves rst and sets wage w 2 0. The monOpolistic rm, after observing the wage set by the union, chooses output (1 2 0. Assume that workers have opportunistic cost l E (0, 1) of their time, that one unit of labor is needed for each unit of output, and rms faces downwardsloping inverse demand p(q) = 1 q. Overall: v1(w,q) = (w l)q and v2(w,q) = q((1 q) w). (a) Find a subgame perfect equilibrium. (b) Find a Nash equilibrium that is not subgame perfect
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