Unionized Labor Market and Regulation of Monopoly
AbstractIn developing countries, empirical evidence suggests that labor unions entail a positive wage gap for unionized workers, in particular in monopolistic and publicly controlled firms. In this paper, we analyze how the presence of a labor union affects the regulation of a monopoly under asymmetric information. Since part of the informational rent left to the monopolistic firm benefits to the syndicate, we prove that the regulator is induced to lower the rent when the union has a large bargaining power. The net consumers' surplus can either increase or decrease with the firm's bargaining power depending on the firm's efficiency type. JEL
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 17279.
Date of creation: 12 Sep 2009
Date of revision:
asymmetric Information ; Labor Union ; Monopolistic Firms ; Regulation Incentives;
Find related papers by JEL classification:
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
- L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-09-19 (All new papers)
- NEP-CTA-2009-09-19 (Contract Theory & Applications)
- NEP-LAB-2009-09-19 (Labour Economics)
- NEP-REG-2009-09-19 (Regulation)
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