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Trade Unions and Firms' Product Market Power

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  • Bughin, Jacques

Abstract

A production function model with efficient bargaining between oligopolistic firms and unions is developed to distinguish between product market power and union power in capturing economic rents. The model is formalized using the generalized Nash bargaining solution and is empirically tested on four Belgian manufacturing sectors. The conclusions are that product market power is significantly eroded by wage rents but firms retain most of their power during negotiations. Also, the restrictions imposed on the data do not reject the hypothesis that wage erosion arises from efficient bargaining in accordance with other empirical findings for Belgian manufacturing. Copyright 1996 by Blackwell Publishing Ltd.

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  • Bughin, Jacques, 1996. "Trade Unions and Firms' Product Market Power," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 289-307, September.
  • Handle: RePEc:bla:jindec:v:44:y:1996:i:3:p:289-307
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    Cited by:

    1. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.
    2. Fedderke, Johannes W. & Hill, Andrew J., 2011. "Industry structure and labor market flexibility in the South African manufacturing sector: A time series and panel data approach," Economic Modelling, Elsevier, vol. 28(3), pages 1291-1302, May.
    3. Dobbelaere, Sabien, 2004. "Estimation of price-cost margins and union bargaining power for Belgian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 22(10), pages 1381-1398, December.
    4. Filip Abraham & Jozef Konings & Stijn Vanormelingen, 2006. "Price and wage setting in an integrating Europe : firm level evidence," Working Paper Research 93, National Bank of Belgium.
    5. Bughin, Jacques, 1999. "The strategic choice of union-oligopoly bargaining agenda," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1029-1040, October.
    6. Fiona Burke & Patrick Walsh, 2012. "Regional earning disparities and the speed of transition: evidence from Poland 1994–1997," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-19, December.
    7. Sara Amoroso & Bertrand Melenberg & Joseph Plasmans & Mark Vancauteren, 2015. "Productivity, Price- and Wage-Markups: An Empirical Analysis of the Dutch Manufacturing Industry," CESifo Working Paper Series 5273, CESifo Group Munich.
    8. Dumont, Michel & Rayp, Glenn & Willemé, Peter, 2012. "The bargaining position of low-skilled and high-skilled workers in a globalising world," Labour Economics, Elsevier, vol. 19(3), pages 312-319.
    9. Domenico Buccella, 2014. "Product market competition with differentiated goods and social welfare in the presence of an industry-wide union," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 13(2), pages 131-140, August.
    10. Amoroso, S., 2013. "Heterogeneity of innovative, collaborative, and productive firm-level processes," Other publications TiSEM f5784a49-7053-401d-855d-1, Tilburg University, School of Economics and Management.
    11. Filip Abraham & Jozef Konings & Stijn Vanormelingen, 2009. "The effect of globalization on union bargaining and price-cost margins of firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 13-36, April.
    12. S. Dobbelaere, 2003. "Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 03/171, Ghent University, Faculty of Economics and Business Administration.
    13. Jozef Konings & Patrick Walsh, 2000. "The Impact of Product Market Competition on Employment Determination in Unionised and Non-Unionised Firms: Firm Level Evidence for the U.K," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 17(4), pages 385-394, December.
    14. Elie Appelbaum, 2008. "Wages, Fringe Benefits and Efficiency in Union-Firm Bargaining," Working Papers 2008_04, York University, Department of Economics.
    15. Kraft, Kornelius, 2017. "Productivity and distribution effects of codetermination in an efficient bargaining," ZEW Discussion Papers 17-039, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    16. António Brandão & Joana Pinho, 2016. "Productivity shocks in a union-duopoly model," FEP Working Papers 576, Universidade do Porto, Faculdade de Economia do Porto.
    17. Dobbelaere, Sabien & Mairesse, Jacques, 2005. "Cross-Sectional Heterogeneity in Price-Cost Margins and the Extent of Rent Sharing at the Sector and Firm Level in France," IZA Discussion Papers 1898, Institute for the Study of Labor (IZA).
    18. Dumont, Michel, 2004. "The Impact of International Trade with Newly Industrialised Countries on the Wages and Employment of Low-Skilled and High-Skilled Workers in the European Union," MPRA Paper 83525, University Library of Munich, Germany.

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