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An Imperfectly Competitive Open Economy with Sequential Bargaining in the Labour Market

  • Dixon, Huw David
  • Santoni, Michele

We consider a three sector small open economy, with a monopolistic non-traded sector, a competitive traded good sector, and a capital goods sector. In both the consumer good sectors, there are enterprise unions that bargain sequentially over wages and employment as in Manning (1987). This approach encompasses the standard monopoly union, right to manage and efficient bargain models. We consider first the effects of bargaining strengths at each stage on overall macroeconomic equilibrium. Here we find strong general equilibrium spillover effects: bargaining strengths in one sector affecting the other sectors. Second, we consider the influence of the bargaining process on the welfare analysis of fiscal policy.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 937.

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Date of creation: Apr 1994
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Handle: RePEc:cpr:ceprdp:937
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