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Wage Bargaining in Industries with Market Power

Author

Listed:
  • A. Jorge Padilla
  • Samuel Bentolila
  • Juan J. Dolado
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.
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Suggested Citation

  • A. Jorge Padilla & Samuel Bentolila & Juan J. Dolado, 1994. "Wage Bargaining in Industries with Market Power," Working Papers wp1994_9408, CEMFI.
    • Handle: RePEc:cmf:wpaper:wp1994_9408
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    References listed on IDEAS

    as
    1. Martin Stephen, 1993. "Endogenous Firm Efficiency in a Cournot Principal-Agent Model," Journal of Economic Theory, Elsevier, vol. 59(2), pages 445-450, April.
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    6. repec:bla:ecorec:v:69:y:1993:i:207:p:393-404 is not listed on IDEAS
    7. Pugel, Thomas A, 1980. "Profitability, Concentration and the Interindustry Variation in Wages," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 248-253, May.
    8. Samuel Bentolila & Juan J. Dolado, 1994. "Labour Flexibility and Wages: Lessons from Spain," Working Papers wp1994_9406, CEMFI.
    9. Ruback, Richard S & Zimmerman, Martin B, 1984. "Unionization and Profitability: Evidence from the Capital Market," Journal of Political Economy, University of Chicago Press, vol. 92(6), pages 1134-1157, December.
    10. 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.
    11. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
    12. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June.
    13. Blanchard, Olivier Jean & Kiyotaki, Nobuhiro, 1987. "Monopolistic Competition and the Effects of Aggregate Demand," American Economic Review, American Economic Association, vol. 77(4), pages 647-666, September.
    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.
    15. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. 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.
    2. Nicole Gürtzgen, 2002. "Trade Liberalization and Union Wages in a Differentiated Bertrand Duopoly," Open Economies Review, Springer, vol. 13(2), pages 133-151, April.
    3. 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.
    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. Bughin, Jacques, 1999. "The strategic choice of union-oligopoly bargaining agenda," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1029-1040, October.
    6. Michele Santoni, 2000. "Specific Excise Taxation in a Unionized Differentiated Duopoly," Public Finance Review, , vol. 28(4), pages 351-371, July.
    7. 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.
    8. 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.
    9. Petrakis, Emmanuel & Vlassis, Minas, 2005. "The endogenous national minimum wage institution," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 747-762, December.
    10. Esperanza Gracia, 1999. "Márgenes y cuotas de mercado. Un análisis con un micropanel," Investigaciones Economicas, Fundación SEPI, vol. 23(3), pages 393-428, September.
    11. 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.
    12. Nickell, Stephen, 1999. "Product markets and labour markets1," Labour Economics, Elsevier, vol. 6(1), pages 1-20, March.
    13. Giorgio Brunello & Daniela Sonedda, 2002. "Labor Tax Progressivity, Wage Determination, and the Relative Wage Effect," CESifo Working Paper Series 721, CESifo.
    14. 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.
    15. 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).

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    More about this item

    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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