Unionized Labor Market and Regulation of Monopoly

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Unionized Labor Market and Regulation of Monopoly

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Jellal, Mohamed

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Mohamed Jellal

Abstract

In 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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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 17279.

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Date of creation: 12 Sep 2009
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Handle: RePEc:pra:mprapa:17279

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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
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)

References listed on IDEAS
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.:

Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December. [Downloadable!] (restricted)
Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer. [Downloadable!] (restricted)
Owoye, Oluwole, 1994. "Wage Determination and Strike Activity in Nigeria," Journal of African Economies, Oxford University Press, vol. 3(3), pages 447-80, December.
Rosen, Sherwin, 1970. "Unionism and the Occupational Wage Structure in the United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 11(2), pages 269-86, June. [Downloadable!] (restricted)
Teal, Francis, 1996. "The Size and sources of economic rents in a developing country manufacturing labour market," Economic Journal, Royal Economic Society, vol. 106(437), pages 963-76, July. [Downloadable!] (restricted)
Other versions:
- Teal, F., 1995. "The Size and Sources of Economic Rents in a Developing Country Manufacturing Labour Market," Working Papers Series 95-6, Centre for the Study of African Economies, University of Oxford.
Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Blackwell Publishing, vol. 87(2), pages 160-93.
Laffont, Jean-Jacques & Tirole, Jean, 1986. "Using Cost Observation to Regulate Firms," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 614-41, June. [Downloadable!] (restricted)
Other versions:
- Jean Tirole & Jean-Jaques Laffont, 1985. "Using Cost Observation to Regulate Firms," Working papers 368, Massachusetts Institute of Technology (MIT), Department of Economics.
MacIsaac, Donna & Rama, Martin, 1997. "Determinants of Hourly Earnings in Ecuador: The Role of Labor Market Regulations," Journal of Labor Economics, University of Chicago Press, vol. 15(3), pages S136-65, July. [Downloadable!] (restricted)
T. Paul Schultz & Germano Mwabu, 1998. "Labor unions and the distribution of wages and employment in South Africa," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 51(4), pages 680-703, July.
Other versions:
- Schultz, T.P. & Mwabu, G., 1997. "Labor Unions and the Distribution of Wages and Employment in South Africa," Papers 776, Yale - Economic Growth Center.
- T. Paul Schultz & Germano Mwabu, 1997. "Labor Unions and the Distribution of Wages and Employment in South Africa," Working Papers 776, Economic Growth Center, Yale University. [Downloadable!]

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