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Managerial delegation under alternative unionization structures

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  • Nicola Meccheri
  • Luciano Fanti

Abstract

This paper studies a three-stage duopoly game with managerial delegation and unions that can be either decentralized or industry-wide. Main findings point out the opposite role played by the introduction of managerial delegation according to the different nature of unionization structure. While under industry-wide union managerial delegation leads to incentives for sales, lower profits and higher consumer surplus as well as overall welfare, in the presence of decentralized unionization all those results are reversed unless unions are strongly employment-oriented. Moreover, introducing managerial delegation makes unionization structure neutral in relation to consumer’s surplus and overall efficiency. Finally, the timing of moves in the three-stage game proves to be important for obtaining the above qualitative results under decentralized unionization.

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Bibliographic Info

Paper provided by Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy in its series Discussion Papers with number 2012/138.

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Date of creation: 01 Jun 2012
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Handle: RePEc:pie:dsedps:2012/138

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Keywords: managerial delegation; unionized duopoly; union’s structure.;

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References

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Cited by:
  1. Nicola Meccheri & Luciano Fanti, 2012. "Managerial Delegation Schemes in a Duopoly with Endogenous Production Costs: A Comparison of Sales and Relative Profit Delegation under Centralised Unionisation," Working Paper Series 44_12, The Rimini Centre for Economic Analysis.
  2. Luciano Fanti & Nicola Meccheri, 2014. "Capacity Choice and Welfare under Alternative Unionisation Structures," Working Paper Series 12_14, The Rimini Centre for Economic Analysis.

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