Collective wage setting when wages are generally binding An antitrust perspective
AbstractThis paper explores the anticompetitive effects that wage determination between an employersâ association and the industryâs labor union may have when wages are generally binding. It is shown that employersâ associations can, under certain circumstances, use generally binding standard wages to raise rivalsâ costs. In equilibrium, it may be optimal for the labor union to demand a wage rate which is either above or below the entry deterring limit wage. Hence, it might be the case that a strong labor union serves as an efficiency enhancing countervailing power, because it keeps the employersâ association from raising the standard wage up to the limit wage. The model is used to explain why both German employersâ associations and German labor unions appear to oppose the removal of a specific legal instrument provided for in the German labor law, the so-called AllgemeinverbindlicherklÃ¤rung (AVE), which makes collectively negotiated employment contracts binding for an entire industry. The entry deterring effect of the AVE suggests that labor market organization is an important determinant of product market competition and should therefore be considered as part of antitrust policies. ZUSAMMENFASSUNG - (Kollektive Lohnvereinbarungen und die AllgemeinverbindlicherklÃ¤rung aus wettbewerbspolitischer Sicht) Der vorliegende Aufsatz analysiert wettbewerbsbeschrÃ¤nkende Wirkungen, die von allgemeinverbindlichen, kollektiven LohnabschlÃ¼ssen zwischen Gewerkschaften und ArbeitgeberverbÃ¤nden ausgehen kÃ¶nnen. Es wird gezeigt, daÃ ArbeitgeberverbÃ¤nde unter bestimmten Bedingungen ein Interesse an allgemeinverbindlichen TariflÃ¶hnen haben, um strategisch die Kosten der Konkurrenz Ã¼berproportional zu erhÃ¶hen (raising rivalsâ costs-Strategie). Durch hinreichend hohe TariflÃ¶hne kann ein Marktzutritt von Konkurrenzunternehmen sogar vollkommen abgewehrt werden. Ob die Gewerkschaft im Gleichgewicht einen Lohn Ã¼ber oder unter dem marktzutrittsbeschrÃ¤nkenden Lohn bevor
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Bibliographic InfoArticle provided by Elsevier in its journal International Review of Law and Economics.
Volume (Year): 21 (2001)
Issue (Month): 3 (September)
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Web page: http://www.elsevier.com/locate/irle
Other versions of this item:
- Justus Haucap & Uwe Pauly & Christian Wey, 2000. "Collective Wage Setting When Wages Are Generally Binding: An Antitrust Perspective," CIG Working Papers FS IV 00-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, December.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
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