IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Collective Wage Setting When Wages Are Generally Binding: An Antitrust Perspective

Listed author(s):
  • Justus Haucap
  • Uwe Pauly
  • Christian Wey

This paper explores the anticompetitive effects that wage determination between an employers’ association and the industry’s labor union may have when wages are generally binding. It is shown that employers’ associations can, under certain circumstances, use generally binding standard wages to raise rivals’ costs. In equilibrium, it may be optimal for the labor union to demand a wage rate which is either above or below the entry deterring limit wage. Hence, it might be the case that a strong labor union serves as an efficiency enhancing countervailing power, because it keeps the employers’ association from raising the standard wage up to the limit wage. The model is used to explain why both German employers’ associations and German labor unions appear to oppose the removal of a specific legal instrument provided for in the German labor law, the so-called Allgemeinverbindlicherklärung (AVE), which makes collectively negotiated employment contracts binding for an entire industry. The entry deterring effect of the AVE suggests that labor market organization is an important determinant of product market competition and should therefore be considered as part of antitrust policies. ZUSAMMENFASSUNG - (Kollektive Lohnvereinbarungen und die Allgemeinverbindlicherklärung aus wettbewerbspolitischer Sicht) Der vorliegende Aufsatz analysiert wettbewerbsbeschränkende Wirkungen, die von allgemeinverbindlichen, kollektiven Lohnabschlüssen zwischen Gewerkschaften und Arbeitgeberverbänden ausgehen können. Es wird gezeigt, daß Arbeitgeberverbände unter bestimmten Bedingungen ein Interesse an allgemeinverbindlichen Tariflöhnen haben, um strategisch die Kosten der Konkurrenz überproportional zu erhöhen (raising rivals’ costs-Strategie). Durch hinreichend hohe Tariflöhne kann ein Marktzutritt von Konkurrenzunternehmen sogar vollkommen abgewehrt werden. Ob die Gewerkschaft im Gleichgewicht einen Lohn über oder unter dem marktzutrittsbeschränkenden Lohn bevorzugt, hängt von den genauen Parameterkonstellationen ab. Das Modell macht jedoch deutlich, daß eine Gewerkschaft als "ausgleichende Kraft" (countervailing power) in Erscheinung treten kann, die eine marktzutrittsbeschränkende Lohnsetzung durch einen monopolistischen Arbeitgeberverband vereitelt. Das Modell beleuchtet das Verhalten der deutschen Arbeitgeberverbände und Gewerkschaften und bietet eine Erklärung, warum sich beide Tarifparteien in Deutschland gegen eine Abschaffung der Allgemeinverbindlicherklärung (AVE) aussprechen, durch die kollektive Lohnabschlüsse den Charakter von Minimallöhnen annehmen. Die vorgelegte Analyse offenbart die wettbewerbsbeschränkenden Wirkungen der AVE und zeigt somit, daß die Organisation von Arbeitsmärkten entscheidenden Einfluß auf die Wettbewerbsintensität auf Gütermärkten hat. Folglich sollte die Organisation des Arbeitsmarktes auch bei der wettbewerbspolitischen Einschätzung von Gütermärkten berücksichtigt werden.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://skylla.wz-berlin.de/pdf/2000/iv00-01.pdf
Download Restriction: no

Paper provided by Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG) in its series CIG Working Papers with number FS IV 00-01.

as
in new window

Length: 36 pages
Date of creation: Jan 2000
Publication status: Published in the International Review of Law and Economics , Vol. 21, (2001), pp. 287-307.
Handle: RePEc:wzb:wzebiv:fsiv00-01
Contact details of provider: Postal:
Reichpietschufer 50, 10785 Berlin, Germany

Phone: (++49)(30) 25491-441
Fax: (++49)(30) 25491-442
Web page: http://www.wzb.eu/mp/wiw/default.en.htm
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window


  1. Franz, Wolfgang, 1991. "German labour markets after unification," Discussion Papers, Series II 162, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
  2. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
  3. Stephen Nickell, 1997. "Unemployment and Labor Market Rigidities: Europe versus North America," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 55-74, Summer.
  4. Rudiger Dornbusch & Holger Wolf, 1992. "Economic Transition in Eastern Germany," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 23(1), pages 235-272.
  5. Wolfgang Scheremet & Jürgen Schupp, 1992. "Pendler und Migranten: zur Arbeitskräftemobilität in Ostdeutschland," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 59(3), pages 21-26.
  6. Roberts, Mark A. & Staehr, Karsten & Tranaes, Torben, 2000. "Two-stage bargaining with coverage extension in a dual labour market," European Economic Review, Elsevier, vol. 44(1), pages 181-200, January.
  7. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  8. Salop, Steven C & Scheffman, David T, 1983. "Raising Rivals' Costs," American Economic Review, American Economic Association, vol. 73(2), pages 267-271, May.
  9. Salop, Steven C & Scheffman, David T, 1987. "Cost-Raising Strategies," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 19-34, September.
  10. Vlassis, Minas & Petrakis, Emmanuel, 1996. "Endogenous wage-bargaining institutions in oligopolistic industries," UC3M Working papers. Economics 6014, Universidad Carlos III de Madrid. Departamento de Economía.
  11. Yoshihiro Yoshida, 2000. "Third-Degree Price Discrimination in Input Markets: Output and Welfare," American Economic Review, American Economic Association, vol. 90(1), pages 240-246, March.
  12. Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, July.
  13. Wolfgang Scheremet, 1992. "Der Arbeitsmarkt in Deutschland," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 59(28/29), pages 355-363.
  14. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
  15. Bughin, Jacques, 1999. "The strategic choice of union-oligopoly bargaining agenda," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1029-1040, October.
  16. Wolfgang Scheremet, 1992. "Der Arbeitsmarkt in Deutschland," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 59(5/6), pages 49-57.
  17. Oliver E. Williamson, 1968. "Wage Rates as a Barrier to Entry: The Pennington Case in Perspective," The Quarterly Journal of Economics, Oxford University Press, vol. 82(1), pages 85-116.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:wzb:wzebiv:fsiv00-01. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer Rontganger)

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 references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.