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On the Role of Regulation in Union - Employer Bargaining

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  • Trevor Stegman

Abstract

This paper provides some analysis of microeconomic criteria for the regulation of union - employer wage bargaining in the context of a decentralised wage determination system. Using a simple model, where the employer has monopoly power in the product market, it is shown that an efficient collusive bargain struck between union and employer will benefit the consumer. This result holds under quite weak assumptions about the objectives of the union. Under not unreasonable assumptions about the nature of union objectives, the collusive bargaining outcome will be better for the consumer them removing the monopoly power of the employer while the monopoly power of the union remains. The implication for wages policy is that rather than proscribe collusive bargaining between a union and an employer with monopoly power, regulation should assist such bargaining as there are social benefits.

Suggested Citation

  • Trevor Stegman, 1999. "On the Role of Regulation in Union - Employer Bargaining," The Economic and Labour Relations Review, , vol. 10(1), pages 92-106, June.
    • Handle: RePEc:sae:ecolab:v:10:y:1999:i:1:p:92-106
    DOI: 10.1177/103530469901000106
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    References listed on IDEAS

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    1. Booth, Alison L, 1984. "A Public Choice Model of Trade Union Behaviour and Membership," Economic Journal, Royal Economic Society, vol. 94(376), pages 883-898, December.
    2. R. O. Hieser, 1970. "Wage Determination with Bilateral Monopoly in the Labour Market: A Theoretical Treatment," The Economic Record, The Economic Society of Australia, vol. 46(1), pages 55-72, March.
    3. Corden, W. Max., 1997. "Trade Policy and Economic Welfare," OUP Catalogue, Oxford University Press, edition 2, number 9780198775348.
    4. Peter Kenyon & Philip E. T. Lewis, 1993. "Union Membership and the Legal and Institutional Environment: Labour Market Policy in Australia and the United Kingdom," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 26(2), pages 48-60, April.
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    Cited by:

    1. Elizabeth Webster & Yi‐Ping Tseng, 2002. "The Determinants of Relative Wage Change in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(1), pages 70-84, March.

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