Advanced Search
MyIDEAS: Login to save this paper or follow this series

Employers’ Associations, Industry-wide Unions, and Competition

Contents:

Author Info

  • 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.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://skylla.wz-berlin.de/pdf/2000/iv00-11.pdf
Download Restriction: no

Bibliographic Info

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 00-11.

as in new window
Length: 50 pages
Date of creation: Aug 2000
Date of revision:
Handle: RePEc:wzb:wzebiv:fsiv00-11

Contact details of provider:
Postal: Reichpietschufer 50, 10785 Berlin, Germany
Phone: (++49)(30) 25491-441
Fax: (++49)(30) 25491-442
Email:
Web page: http://www.wzb.eu/mp/wiw/default.en.htm
More information through EDIRC

Related research

Keywords:

References

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.:
as in new window
  1. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 661465000000000387, David K. Levine.
  2. 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).
  3. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Wiley Blackwell, vol. 56(1), pages 59-76, January.
  4. Oswald, Andrew J., 1993. "Efficient contracts are on the labour demand curve : Theory and facts," Labour Economics, Elsevier, vol. 1(1), pages 85-113, June.
  5. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
  6. 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.
  7. 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.
  8. 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.
  9. Manzini, P., 1996. "Game Theoretic Models of Wage Bargaining," Discussion Papers 9615, Exeter University, Department of Economics.
  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. David Card, 1988. "Unexpected Inflation, Real Wages, and Employment Determination in Union Contracts," Working Papers 612, Princeton University, Department of Economics, Industrial Relations Section..
  12. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June.
  13. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, September.
  14. 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).
  15. Paz Espinosa, Maria & Rhee, Changyong, 1989. "Efficient Wage Bargaining as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 565-88, August.
  16. 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.
  17. Justus Haucap & Uwe Pauly & Christian Wey, 2000. "Collective Wage Setting When Wages Are Generally Binding: An Antitrust Perspective," CIG Working Papers FS IV 00-01, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  18. 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.
  19. Emmanuel Petrakis & Minas Vlassis, 2004. "Endogenous wage bargaining institutions in oligopolistic sectors," Economic Theory, Springer, vol. 24(1), pages 55-73, 07.
  20. Svejnar, J., 1984. "Bargaining power, fear of disagreement and wage settlements: theory and evidence from U.S. industry," CORE Discussion Papers 1984037, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  21. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers 573, Princeton University, Department of Economics, Industrial Relations Section..
  22. Dowrick, Steve, 1989. "Union-Oligopoly Bargaining," Economic Journal, Royal Economic Society, vol. 99(398), pages 1123-42, December.
  23. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-93.
  24. 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 303-30, July.
  25. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  26. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
  27. 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.
  28. Bughin, Jacques R.J. & Vannini, Stefano, 1996. "To be (Unionized) or Not to be? A Case for Cost-raising Strategies," CEPR Discussion Papers 1527, C.E.P.R. Discussion Papers.
  29. 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 S3-S39, June.
  30. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
  31. 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.
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 in new window

Cited by:
  1. Suchan Chae & Paul Heidhues, 2004. "Buyers' Alliances for Bargaining Power," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 731-754, December.
  2. 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).

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

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.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer Rontganger).

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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