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Collective Wage Agreements on Fixed Wages and Piece Rates May Cartelize Product Markets

  • Annette Kirstein
  • Roland Kirstein

Labor law limits the freedom of individual firms and agents to deviate from the clauses prescribed by collective wage agreements. We show that employers´ associations and unions may exploit this legal framework to stabilize product market cartels. This new view on the institution of collective wage agreements provides an interesting insight for strategic management: A self-commitment on the labor market may greatly improve the product market situation. Moreover, it has an important implication for economic policy: Competition authorities should observe collective wage agreements for their potentially collusive effect on product markets.

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Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 165 (2009)
Issue (Month): 2 (June)
Pages: 250-259

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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200906)165:2_250:cwaofw_2.0.tx_2-f
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