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Endogenous wage bargaining institutions in oligopolistic sectors

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Author Info
Emmanuel Petrakis ()
Minas Vlassis

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Abstract

This paper explores the endogenous emergence of wage bargaining institutions in a union-oligopoly framework. Technological asymmetries among firms are shown to be the driving force for the emergence of alternative wage bargaining centralization structures that are observable in real life. As wage deals at the sector-level obtain the consensus of all unions and the efficient firms, a regulator has an incentive to authorize those deals by activating/establishing a Minimum Sectoral Wage Institution(MSWI). If productivity differences are high enough, wage setting above the established wage floor may subsequently occur in efficient firms. Otherwise, a completely centralized wage bargaining structure emerges and the sector-level wage deal is simply confirmed as the firms’ wage rate. If, however, productivity asymmetries are rather insignificant, firms and unions have conflicting interests and a completely decentralized wage bargaining regime prevails in equilibrium. Copyright Springer-Verlag Berlin/Heidelberg 2004

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File URL: http://hdl.handle.net/10.1007/s00199-003-0410-3
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Publisher Info
Article provided by Springer in its journal Economic Theory.

Volume (Year): 24 (2004)
Issue (Month): 1 (07)
Pages: 55-73
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Handle: RePEc:spr:joecth:v:24:y:2004:i:1:p:55-73

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Related research
Keywords: Wage negotiations; Bargaining institutions; Unions; Oligopoly; Minimum wage.;

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References listed on IDEAS
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  1. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-71, May. [Downloadable!] (restricted)
  2. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-49, May. [Downloadable!] (restricted)
  3. A. Jorge Padilla & Samuel Bentolila & Juan J. Dolado, 1996. "Wage Bargaining in Industries with Market Power," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 5(4), pages 535-564, December. [Downloadable!] (restricted)
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  4. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Blackwell Publishing, vol. 56(1), pages 59-76, January. [Downloadable!] (restricted)
  5. Torsten Persson & Guido Tabellini, 1999. "Political Economics and Public Finance," NBER Working Papers 7097, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer. [Downloadable!] (restricted)
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  8. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-78, September. [Downloadable!] (restricted)
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  9. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-95, September. [Downloadable!] (restricted)
  10. Emmanuel Petrakis & Minas Vlassis, 1999. "The strategic role of minimum sectorial wages in oligopoly: a case for the Spanish labour market," Investigaciones Economicas, Fundación SEPI, vol. 23(3), pages 331-350, September. [Downloadable!]
  11. Richard Jackman & Christopher A. Pissarides & S Savouri, 1990. "Labour Market Policies and Unemployment in the OECD," CEP Discussion Papers dp0011, Centre for Economic Performance, LSE.
  12. A. Jorge Padilla & Samuel Bentolila & Juan J. Dolado, 1996. "Wage Bargaining in Industries with Market Power," Banco de España Working Papers 9616, Banco de España.
  13. Emmanuel Petrakis & Minas Vlassis, 2004. "Endogenous wage bargaining institutions in oligopolistic sectors," Economic Theory, Springer, vol. 24(1), pages 55-73, 07. [Downloadable!] (restricted)
    Other versions:
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Cited by:
(explanations, 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.)

  1. Constantine Manasakis & Emmanuel Petrakis, 2007. "Union structure and firms incentives for cooperative R&D investments," Working Papers 0705, University of Crete, Department of Economics. [Downloadable!]
    Other versions:
  2. Emmanuel Petrakis & Minas Vlassis, . "Endogenous Wage-Bargaining Institutions in Oligopolistic Sectors," Working Papers 0105, University of Crete, Department of Economics, revised 00 Dec 2001. [Downloadable!]
    Other versions:
  3. Paul Heidhues, 2000. "Employers’ Associations, Industry-wide Unions, and Competition," CIG Working Papers FS IV 00-11, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG). [Downloadable!]
  4. Minas Vlassis & Nick Drydakis, . "A Union-Oligopoly Model of Endogenous Discrimination:Should it be wage discrimination taxed or discriminated employment subsidized?," Working Papers 0614, University of Crete, Department of Economics. [Downloadable!]
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