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Managerial Delegation Contracts under Centralized Unionization
Author(s) -
Meccheri Nicola,
Fanti Luciano
Publication year - 2014
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.2606
Subject(s) - delegation , duopoly , profitability index , microeconomics , product market , profit (economics) , product differentiation , wage , economics , product (mathematics) , welfare , industrial organization , monopoly , competition (biology) , business , labour economics , cournot competition , market economy , finance , management , biology , ecology , geometry , mathematics , incentive
This paper studies how alternative managerial delegation contracts in a duopoly product market interact with wage decisions taken by a central (industry‐wide) union in the labor market. Interestingly, results prove to be more varied with respect to findings by the managerial delegation literature with exogenous production costs. Most notably, it is pointed out that, in equilibrium, both firm profitability and welfare outcomes can be superior under both sales delegation and relative profit delegation, depending on various factors such as the degree of product differentiation and the competition regime. Copyright © 2013 John Wiley & Sons, Ltd.