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Wage Bargaining in Industries with Market Power

Author

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  • Bentolila, Samuel
  • Dolado, Juan J.
  • Padilla, Atilano Jorge

Abstract

In this paper we develop a fully game-theoretic version of the right-to-manage model of firm-level bargaining where strategic interactions among firms are explicitly recognized. Our main aim is to investigate how equilibrium wages and employment react to changes in the labour and product markets, the business cycle and economic policy. We show that our comparative statics results hinge crucially on the strategic nature of the game, which in turn is determined by the relative bargaining power of unions and managers.

Suggested Citation

  • Bentolila, Samuel & Dolado, Juan J. & Padilla, Atilano Jorge, 1994. "Wage Bargaining in Industries with Market Power," CEPR Discussion Papers 987, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:987
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    9. Clark, Kim B, 1984. "Unionization and Firm Performance: The Impact on Profits, Growth, and Productivity," American Economic Review, American Economic Association, vol. 74(5), pages 893-919, December.
    10. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
    11. Steve Dowrick, 1993. "Enterprise Bargaining, Union Structure and Wages," The Economic Record, The Economic Society of Australia, vol. 69(4), pages 393-404, December.
    12. Santoni, Michele, 1996. "Union-Oligopoly Sequential Bargaining: Trade and Industrial Policies," Oxford Economic Papers, Oxford University Press, vol. 48(4), pages 640-663, October.
    13. Dowrick, Steve & Spencer, Barbara J, 1994. "Union Attitudes to Labor-Saving Innovation: When Are Unions Luddites?," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 316-344, April.
    14. Michael A. Salinger, 1984. "Tobin's q, Unionization, and the Concentration-Profits Relationship," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 159-170, Summer.
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    Citations

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    Cited by:

    1. Nicole Gürtzgen, 2002. "Trade Liberalization and Union Wages in a Differentiated Bertrand Duopoly," Open Economies Review, Springer, vol. 13(2), pages 133-151, April.
    2. Bughin, Jacques, 1999. "The strategic choice of union-oligopoly bargaining agenda," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1029-1040, October.
    3. Emmanuel Petrakis & Minas Vlassis, 2004. "Endogenous wage bargaining institutions in oligopolistic sectors," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 24(1), pages 55-73, July.
    4. Esperanza Gracia, 1999. "Márgenes y cuotas de mercado. Un análisis con un micropanel," Investigaciones Economicas, Fundación SEPI, vol. 23(3), pages 393-428, September.
    5. Jo Seldeslachts, 2008. "Synchronising Deregulation In Product And Labour Markets," Scottish Journal of Political Economy, Scottish Economic Society, vol. 55(5), pages 591-617, November.
    6. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
    7. Jo Seldeslachts, 2002. "Interactions Between Product and Labour Market Reforms," UFAE and IAE Working Papers 519.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    8. Rupayan Pal & Bibhas Saha, 2008. "Union-oligopoly bargaining and entry deterrence: a reassessment of limit pricing," Journal of Economics, Springer, vol. 95(2), pages 121-147, November.
    9. Vlassis, Minas & Mamakis, Stefanos & Varvataki, Maria, 2019. "Taxes, social insurance contributions, and undeclared labour in unionized oligopoly," Economics Letters, Elsevier, vol. 183(C), pages 1-1.
    10. Joaquín Andaluz, 2011. "Validity of the “Principle of Maximum Product Differentiation” in a unionized mixed-duopoly," Journal of Economics, Springer, vol. 102(2), pages 123-136, March.
    11. Emmanuel Petrakis & Minas Vlassis, 1999. "The strategic role of minimum sectorial wages in oligopoly: a case for the Spanish labour market," Investigaciones Economicas, Fundación SEPI, vol. 23(3), pages 331-350, September.
    12. Minas Vlassis, 2003. "Wage Centralization and the Scope of Firm–Union Bargaining: ‘Efficient Bargains’ or ‘Labour Demand’?," Manchester School, University of Manchester, vol. 71(3), pages 308-329, June.
    13. Petrakis, Emmanuel & Vlassis, Minas, 2005. "The endogenous national minimum wage institution," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 747-762, December.
    14. Giorgio Brunello & Daniela Sonedda, 2002. "Labor Tax Progressivity, Wage Determination, and the Relative Wage Effect," CESifo Working Paper Series 721, CESifo.

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    More about this item

    Keywords

    Bargaining; Strategic Complementarity; Strategic Substitutability; Wages;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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