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Collective Wage Setting When Wages Are Generally Binding: An Antitrust Perspective

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  • Justus Haucap
  • Uwe Pauly
  • Christian Wey

Abstract

This paper explores the anticompetitive effects that wage determination between an employers’ association and the industry’s labor union may have when wages are generally binding. It is shown that employers’ associations can, under certain circumstances, use generally binding standard wages to raise rivals’ 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 employers’ association from raising the standard wage up to the limit wage. The model is used to explain why both German employers’ 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 Allgemeinverbindlicherklärung (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 Allgemeinverbindlicherklärung aus wettbewerbspolitischer Sicht) Der vorliegende Aufsatz analysiert wettbewerbsbeschränkende Wirkungen, die von allgemeinverbindlichen, kollektiven Lohnabschlüssen zwischen Gewerkschaften und Arbeitgeberverbänden ausgehen können. Es wird gezeigt, daß Arbeitgeberverbände unter bestimmten Bedingungen ein Interesse an allgemeinverbindlichen Tariflöhnen haben, um strategisch die Kosten der Konkurrenz überproportional zu erhöhen (raising rivals’ costs-Strategie). Durch hinreichend hohe Tariflöhne kann ein Marktzutritt von Konkurrenzunternehmen sogar vollkommen abgewehrt werden. Ob die Gewerkschaft im Gleichgewicht einen Lohn über oder unter dem marktzutrittsbeschränkenden Lohn bevorzugt, hängt von den genauen Parameterkonstellationen ab. Das Modell macht jedoch deutlich, daß eine Gewerkschaft als "ausgleichende Kraft" (countervailing power) in Erscheinung treten kann, die eine marktzutrittsbeschränkende Lohnsetzung durch einen monopolistischen Arbeitgeberverband vereitelt. Das Modell beleuchtet das Verhalten der deutschen Arbeitgeberverbände und Gewerkschaften und bietet eine Erklärung, warum sich beide Tarifparteien in Deutschland gegen eine Abschaffung der Allgemeinverbindlicherklärung (AVE) aussprechen, durch die kollektive Lohnabschlüsse den Charakter von Minimallöhnen annehmen. Die vorgelegte Analyse offenbart die wettbewerbsbeschränkenden Wirkungen der AVE und zeigt somit, daß die Organisation von Arbeitsmärkten entscheidenden Einfluß auf die Wettbewerbsintensität auf Gütermärkten hat. Folglich sollte die Organisation des Arbeitsmarktes auch bei der wettbewerbspolitischen Einschätzung von Gütermärkten berücksichtigt werden.

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Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 00-01.

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Length: 36 pages
Date of creation: Jan 2000
Date of revision:
Publication status: Published in the International Review of Law and Economics , Vol. 21, (2001), pp. 287-307.
Handle: RePEc:wzb:wzebiv:fsiv00-01

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Keywords: Collective wage setting; wages; antitrust;

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  1. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  2. 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.
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