IDEAS home Printed from https://ideas.repec.org/p/wzb/wzebiv/fsiv00-11.html
   My bibliography  Save this paper

Employers’ Associations, Industry-wide Unions, and Competition

Author

Listed:
  • Paul Heidhues

Abstract

This paper investigates the effects of industry-wide unions and employers’ associations in a duopolistic industry. Using an efficient bargaining model, we show that it is profitable for workers to form an industry union if firms produce goods that are substitutes. In our model industry-wide unionization raises serious antitrust issues since it leads to a monopolistic product market outcome - regardless of whether bargaining is centralized or not. Firms respond to an industry union by forming an employers’ association to increase their bargaining power. If firms’ productivity differences are relatively small or their products relatively heterogeneous, employers’ associations have distributional but not efficiency consequences. If, however, productivity differences between firms are relatively large and their products are relatively homogeneous, employers’ associations may further reduce welfare. ZUSAMMENFASSUNG - (Arbeitgeberverbände, Industriegewerkschaften und Wettbewerb) Dieser Beitrag untersucht die ökonomischen Auswirkungen von Industriegewerkschaften und Arbeitgeberverbänden in einer duopolistischen Industrie. Anhand eines effizienten Verhand-lungsmodells zeigen wir, dass es sich für Arbeitnehmer lohnt, eine Industriegewerkschaft zu gründen, wenn die Unternehmen substituierbare Güter herstellen. Die Bildung einer Industrie-gewerkschaft ist aus wettbewerbspolitischer Sicht jedoch höchst bedenklich, da sie zu einer Monopolisierung des Produktmarktes führt - unabhängig davon, ob Lohnverhandlungen zentral oder dezentral durchgeführt werden. In unserem Modell ist es für die Unternehmen optimal, auf eine Industriegewerkschaft mit der Gründung eines Arbeitgeberverbandes zu reagieren, weil das die Verhandlungsmacht gegenüber der Gewerkschaft erhöht. Wenn die Produktivitätsunterschiede zwischen den Firmen relativ klein sind oder die Firmen sehr heterogene Produkte produzieren, beeinflussen Arbeitgeberverbände zwar die Verteilung, aber nicht die Höhe der Industrierente. Arbeitgeberverbände können die gesamtwirtschaftliche Wohlfahrt senken, wenn die Produktivitätsunterschiede zwischen den Unternehmen groß und die Produkte relativ homogen sind.

Suggested Citation

  • 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).
  • Handle: RePEc:wzb:wzebiv:fsiv00-11
    as

    Download full text from publisher

    File URL: http://skylla.wz-berlin.de/pdf/2000/iv00-11.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
    2. 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 1055-1078, September.
    3. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-497, June.
    4. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, Decembrie.
    5. Paola Manzini, 1998. "Game Theoretic Models of Wage Bargaining," Journal of Economic Surveys, Wiley Blackwell, vol. 12(1), pages 1-41, February.
    6. Oswald, A. J., 1995. "Efficient contracts are on the labour demand curve: Theory and facts," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
    7. Brown, James N & Ashenfelter, Orley, 1986. "Testing the Efficiency of Employment Contracts," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 40-87, June.
    8. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
    9. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    10. Jaques BUGHIN & Stefano VANNINI, 1996. "To be (unionized) or not to be? A Case for Cost-Raising Strategies," Vienna Economics Papers vie9614, University of Vienna, Department of Economics.
    11. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
    12. Emmanuel Petrakis & Minas Vlassis, 2004. "Endogenous wage bargaining institutions in oligopolistic sectors," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(1), pages 55-73, July.
    13. Dowrick, Steve, 1990. "The relative profitability of Nash bargaining on the labour demand curve or the contract curve," Economics Letters, Elsevier, vol. 33(2), pages 121-125, June.
    14. Card, David, 1990. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts," American Economic Review, American Economic Association, vol. 80(4), pages 669-688, September.
    15. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
    16. Stole, Lars A & Zwiebel, Jeffrey, 1996. "Organizational Design and Technology Choice under Intrafirm Bargaining," American Economic Review, American Economic Association, vol. 86(1), pages 195-222, March.
    17. repec:adr:anecst:y:1995:i:37-38:p:06 is not listed on IDEAS
    18. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    19. Haucap, Justus & Pauly, Uwe & Wey, Christian, 2001. "Collective wage setting when wages are generally binding An antitrust perspective," International Review of Law and Economics, Elsevier, vol. 21(3), pages 287-307, September.
    20. Abowd, John M, 1989. "The Effect of Wage Bargains on the Stock Market Value of the Firm," American Economic Review, American Economic Association, vol. 79(4), pages 774-800, September.
    21. Martinello, Felice, 1989. "Wage and Employment Determination in a Unionized Industry: The IWA and the British Columbia Wood Products Industry," Journal of Labor Economics, University of Chicago Press, vol. 7(3), pages 303-330, July.
    22. Dobson, Paul W., 1994. "Multifirm unions and the incentive to adopt pattern bargaining in oligopoly," European Economic Review, Elsevier, vol. 38(1), pages 87-100, January.
    23. Suchan Chae & Paul Heidhues, 1999. "Bargaining Power of a Coalition in Parallel Bargaining: Advantage of Multiple Cable System Operators," CIG Working Papers FS IV 99-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    24. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 3-39, June.
    25. Maria Paz Espinosa & Changyong Rhee, 1989. "Efficient Wage Bargaining as a Repeated Game," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(3), pages 565-588.
    26. Petrakis, Emmanuel & Vlassis, Minas, 1996. "Endogenous wage-bargaining institutions in oligopolistic industries," UC3M Working papers. Economics 6014, Universidad Carlos III de Madrid. Departamento de Economía.
    27. Bean, Charles R & Turnbull, Peter J, 1988. "Employment in the British Coal Industry: A Test of the Labour Demand Model," Economic Journal, Royal Economic Society, vol. 98(393), pages 1092-1104, December.
    28. Dowrick, Steve, 1989. "Union-Oligopoly Bargaining," Economic Journal, Royal Economic Society, vol. 99(398), pages 1123-1142, December.
    29. Soltwedel, Rüdiger & Bothe, Adrian & Hoffmeyer, Martin & Laaser, Claus-Friedrich & Lammers, Konrad & Merz, Monika & Reuter, Dieter, 1990. "Regulierungen auf dem Arbeitsmarkt der Bundesrepublik," Open Access Publications from Kiel Institute for the World Economy 418, Kiel Institute for the World Economy (IfW Kiel).
    30. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-139, March.
    31. Byoung Heon Jun, 1989. "Non-cooperative Bargaining and Union Formation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(1), pages 59-76.
    32. Doiron, Denise J, 1992. "Bargaining Power and Wage-Employment Contracts in a Unionized Industry," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 33(3), pages 583-606, August.
    33. Curtis J. Eberwein & Tryphon Kollintzas, 1995. "A Dynamic Model of Bargaining in a Unionized Firm with Irreversible Investment," Annals of Economics and Statistics, GENES, issue 37-38, pages 91-115.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xavier Martinez-Giralt & Pedro Pita Barros, 2000. "Selecting Negotiation Processes with Health Care," UFAE and IAE Working Papers 467.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    2. Suchan Chae & Paul Heidhues, 2004. "Buyers' Alliances for Bargaining Power," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 731-754, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. António Brandão & Joana Pinho, 2018. "Productivity Shocks in a Union‐Duopoly Model," Manchester School, University of Manchester, vol. 86(6), pages 722-756, December.
    2. Nicholas Lawson, 2011. "Is Collective Bargaining Pareto Efficient? A Survey of the Literature," Journal of Labor Research, Springer, vol. 32(3), pages 282-304, September.
    3. Petrakis, Emmanuel & Vlassis, Minas, 2000. "Endogenous scope of bargaining in a union-oligopoly model: when will firms and unions bargain over employment?," Labour Economics, Elsevier, vol. 7(3), pages 261-281, May.
    4. Thorsten Upmann & Julia Müller, 2014. "The Structure of Firm-Specific Labour Unions," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(2), pages 336-364, June.
    5. Chica Páez, Yolanda & Espinosa Alejos, María Paz, 2005. "Union Formation and Bargaining Rules in the Labor Market," DFAEII Working Papers 1988-088X, University of the Basque Country - Department of Foundations of Economic Analysis II.
    6. Bill Yang, 1995. "Unionized oligopoly, labor-management cooperation, and international competitiveness," Journal of Economics, Springer, vol. 62(1), pages 33-53, February.
    7. repec:pri:indrel:dsp01cc08hf62w is not listed on IDEAS
    8. Petrakis, Emmanuel & Vlassis, Minas, 1996. "Endogenous scope of bargaining in oligopoly," UC3M Working papers. Economics 3978, Universidad Carlos III de Madrid. Departamento de Economía.
    9. Claus-Jochen Haake & Thorsten Upmann & Papatya Duman, 2019. "The Decomposability of the Nash Bargaining Solution in Labor Markets," Working Papers CIE 128, Paderborn University, CIE Center for International Economics.
    10. Claus-Jochen Haake & Thorsten Upmann & Papatya Duman, 2020. "Wage Bargaining and Employment Revisited: Separability and Efficiency in Collective Bargaining," CESifo Working Paper Series 8422, CESifo.
    11. Marco Guerrazzi & Pier Giuseppe Giribone, 2021. "Dynamic wage bargaining and labour market fluctuations: the role of productivity shocks," SN Business & Economics, Springer, vol. 1(8), pages 1-20, August.
    12. Louis N. Christofides & Andrew J. Oswald, 1991. "Efficient and Inefficient Employment Outcomes: A Study Based on Canadian Data," NBER Working Papers 3648, National Bureau of Economic Research, Inc.
    13. Hirsch, Barry T. & Prasad, Kislaya, 1995. "Wage-employment determination and a union tax on capital: Can theory and evidence be reconciled?," Economics Letters, Elsevier, vol. 48(1), pages 61-71, April.
    14. Andrews, Martyn & Harrison, Alan, 1998. "Testing for Efficient Contracts in Unionized Labour Markets," Bulletin of Economic Research, Wiley Blackwell, vol. 50(3), pages 171-200, July.
    15. repec:eee:labchp:v:2:y:1986:i:c:p:1039-1089 is not listed on IDEAS
    16. Petrakis, Emmanuel & Vlassis, Minas, 1996. "Endogenous wage-bargaining institutions in oligopolistic industries," UC3M Working papers. Economics 6014, Universidad Carlos III de Madrid. Departamento de Economía.
    17. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225, Elsevier.
    18. Daniel P. O'Brien, 2014. "The welfare effects of third-degree price discrimination in intermediate good markets: the case of bargaining," RAND Journal of Economics, RAND Corporation, vol. 45(1), pages 92-115, March.
    19. Fanti, Luciano & Buccella, Domenico, 2015. "Bargaining agenda, timing, and entry," MPRA Paper 64089, University Library of Munich, Germany.
    20. Juan Carlos Bárcena-Ruiz & María Luz Campo, 2010. "Wage bargaining and partial ownership," Estudios de Economia, University of Chile, Department of Economics, vol. 37(1 Year 20), pages 27-42, June.
    21. Göddeke, Anna & Haucap, Justus & Herr, Annika & Wey, Christian, 2011. "Stabilität und Wandel von Arbeitsmarktinstitutionen aus wettbewerbsökonomischer Sicht," DICE Ordnungspolitische Perspektiven 10, Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wzb:wzebiv:fsiv00-11. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jennifer Rontganger (email available below). General contact details of provider: https://edirc.repec.org/data/cicwzde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.