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Endogenous wage-bargaining institutions in oligopolistic industries

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  • Petrakis, Emmanuel
  • Vlassis, Minas

Abstract

This paper develops a framework of endogenous formation of wage-bargaining institutions regarding the level at which unions and firms negotiate in industries with market power. We show that economic factors, such as asymmetries in productive efficiency and bargaining power, are responsible for the en~ ',gence of various degrees of bargaining centralization. An all unionefficient firms majorit) coalition typically establishes an extra stage of wage negotiations at the sectorial level. If, for given bargaining powers, the productivity differences are sufficiently high, wage negotiations are also conducted at firm-level. Otherwise, the (minimum) wage bargain struck at the sectorial level is simply confirmed by both, firms and unions. This is a case of complete bargaining centralization. If, however, technological and bargaining power asymmetries cancel out, wage negotiations are conducted only at the firm level (decentralized bargaining).

Suggested Citation

  • 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.
  • Handle: RePEc:cte:werepe:6014
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    References listed on IDEAS

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    1. 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.
    2. Vannetelbosch, Vincent J., 1997. "Wage bargaining with incomplete information in an unionized Cournot oligopoly," European Journal of Political Economy, Elsevier, vol. 13(2), pages 353-374, May.
    3. Kollintzas, Tryphon & Vassilatos, Vanghelis, 2000. "A small open economy model with transaction costs in foreign capital," European Economic Review, Elsevier, vol. 44(8), pages 1515-1541, August.
    4. 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.
    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. 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.
    7. 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).
    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.

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    Bargaining institutions;

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