IDEAS home Printed from https://ideas.repec.org/p/crt/wpaper/0105.html
   My bibliography  Save this paper

Endogenous Wage-Bargaining Institutions in Oligopolistic Sectors

Author

Listed:
  • Emmanuel Petrakis

    (Department of Economics, University of Crete, Greece)

  • Minas Vlassis

    (Department of Economics, University of Ioannina, Greece)

Abstract

This paper explores the endogenous emergence of wage bargaining institutions in sectors with market power. We show that asymmetries in firms’ productivity and in unions’ risk aversion and/or bargaining power may generate various degrees of centralization in wage bargaining, which are often observable in real life. In the presence of such asymmetries, a winning coalition of all the unions and (typically) the efficient firms has an incentive to establish wage bargaining centralization at the sectoral level. If productivity differences are high enough, wage bargaining may also occur at the firm level, but only regarding the efficient firms. Otherwise, a completely centralized structure prevails and the sectoral wage deal is simply confirmed by all firms and unions. However, if the sources of asymmetry “cancel out”, decentralized wage bargaining is sustained in equilibrium.

Suggested Citation

  • Emmanuel Petrakis & Minas Vlassis, "undated". "Endogenous Wage-Bargaining Institutions in Oligopolistic Sectors," Working Papers 0105, University of Crete, Department of Economics, revised 00 Dec 2001.
    • Handle: RePEc:crt:wpaper:0105
    as

    Download full text from publisher

    File URL: http://economics.soc.uoc.gr/wpa/docs/Endwagebarg1101.pdf
    File Function: First version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-271, May.
    2. Freeman, Richard B, 1996. "The Minimum Wage as a Redistributive Tool," Economic Journal, Royal Economic Society, vol. 106(436), pages 639-649, May.
    3. A. Jorge Padilla & Samuel Bentolila & Juan J. Dolado, 1996. "Wage Bargaining in Industries with Market Power," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 5(4), pages 535-564, December.
    4. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-1078, September.
    5. Persson, Torsten & Tabellini, Guido, 2002. "Political economics and public finance," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 24, pages 1549-1659, Elsevier.
    6. Salop, Steven C & Scheffman, David T, 1987. "Cost-Raising Strategies," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 19-34, September.
    7. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173, Decembrie.
    8. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
    9. Byoung Heon Jun, 1989. "Non-cooperative Bargaining and Union Formation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(1), pages 59-76.
    10. 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.
    11. Richard Jackman & Christopher A. Pissarides & S Savouri, 1990. "Labour Market Policies and Unemployment in the OECD," CEP Discussion Papers dp0011, Centre for Economic Performance, LSE.
    12. Booth,Alison L., 1994. "The Economics of the Trade Union," Cambridge Books, Cambridge University Press, number 9780521468398, January.
    13. Oliver E. Williamson, 1968. "Wage Rates as a Barrier to Entry: The Pennington Case in Perspective," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(1), pages 85-116.
    14. 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.
    15. Petrakis, Emmanuel & Vlassis, Minas, 1996. "Endogenous wage-bargaining institutions in oligopolistic industries," UC3M Working papers. Economics 6014, Universidad Carlos III de Madrid. Departamento de Economía.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Petrakis, Emmanuel & Vlassis, Minas, 2005. "The endogenous national minimum wage institution," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 747-762, December.
    3. Haucap, Justus & Pauly, Uwe & Wey, Christian, 2001. "Collective wage setting when wages are generally binding An antitrust perspective," International Review of Law and Economics, Elsevier, vol. 21(3), pages 287-307, September.
    4. Paul Heidhues, 2000. "Employers’ Associations, Industry-wide Unions, and Competition," CIG Working Papers FS IV 00-11, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    5. Petrakis, Emmanuel & Vlassis, Minas, 2003. "Minimum wages in national and internationally integrated economies," Journal of Policy Modeling, Elsevier, vol. 25(3), pages 257-265, April.
    6. António Brandão & Joana Pinho, 2018. "Productivity Shocks in a Union‐Duopoly Model," Manchester School, University of Manchester, vol. 86(6), pages 722-756, December.
    7. Petrakis, Emmanuel & Vlassis, Minas, 2000. "Endogenous scope of bargaining in a union-oligopoly model: when will firms and unions bargain over employment?," Labour Economics, Elsevier, vol. 7(3), pages 261-281, May.
    8. Petrakis, Emmanuel & Vlassis, Minas, 1996. "Endogenous scope of bargaining in oligopoly," UC3M Working papers. Economics 3978, Universidad Carlos III de Madrid. Departamento de Economía.
    9. Fanti, Luciano & Gori, Luca, 2013. "Efficient bargaining versus right to manage: A stability analysis in a Cournot duopoly with trade unions," Economic Modelling, Elsevier, vol. 30(C), pages 205-211.
    10. Christopher A. Pissarides, 2003. "Unemployment in Britain: A European Success Story," CESifo Working Paper Series 981, CESifo.
    11. Constantine Manasakis & Emmanuel Petrakis, 2009. "Union structure and firms' incentives for cooperative R&D investments," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 665-693, May.
    12. Dube Arindrajit & Reddy Sanjay G., 2014. "Threat Effects and Trade: Wage Discipline through Product Market Competition," Journal of Globalization and Development, De Gruyter, vol. 4(2), pages 213-252, March.
    13. Petrakis, Emmanuel & Vlassis, Minas, 1996. "Endogenous wage-bargaining institutions in oligopolistic industries," UC3M Working papers. Economics 6014, Universidad Carlos III de Madrid. Departamento de Economía.
    14. Ronald Bachmann & Thomas K. Bauer & Hanna Frings, 2014. "Minimum Wages as a Barrier to Entry: Evidence from Germany," LABOUR, CEIS, vol. 28(3), pages 338-357, September.
    15. Hirsch, Boris & Schnabel, Claus, 2011. "Let's Take Bargaining Models Seriously: The Decline in Union Power in Germany, 1992-2009," IZA Discussion Papers 5875, Institute of Labor Economics (IZA).
    16. Thorsten Upmann & Julia Müller, 2014. "The Structure of Firm-Specific Labour Unions," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(2), pages 336-364, June.
    17. Manasakis, Constantine & Vlassis, Minas, 2014. "Downstream mode of competition with upstream market power," Research in Economics, Elsevier, vol. 68(1), pages 84-93.
    18. John Pencavel, 2009. "How Successful Have Trade Unions Been? A Utility-Based Indicator of Union Well-Being," ILR Review, Cornell University, ILR School, vol. 62(2), pages 147-156, January.
    19. Dormady, Noah C., 2013. "Market power in cap-and-trade auctions: A Monte Carlo approach," Energy Policy, Elsevier, vol. 62(C), pages 788-797.
    20. Ching-Chong Lai & Juin-Jen Chang, 2002. "Nominal versus real wage rigidity in a monopoly union: A synthesis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 30(1), pages 61-73, March.

    More about this item

    Keywords

    Wage Negotiations; Bargaining Institutions; Unions; Oligopoly; Minimum Wage.;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crt:wpaper:0105. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kostis Pigounakis (email available below). General contact details of provider: https://edirc.repec.org/data/deuchgr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.