Collective wage setting when wages are generally binding An antitrust perspective
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
(This abstract was borrowed from another version of this item.)
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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
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.:
- Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, June.
- McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
When requesting a correction, please mention this item's handle: RePEc:eee:irlaec:v:21:y:2001:i:3:p:287-307. 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: (Zhang, Lei)
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.