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WAGE BARGAINING WITH A PRICE‐SETTING FIRM
Author(s) -
Arnsperger Christian,
Croix David
Publication year - 1990
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.1990.tb00479.x
Subject(s) - monopolistic competition , economics , monopoly , wage , microeconomics , wage bargaining , labour economics , efficiency wage , capital (architecture) , competition (biology) , bargaining power , labor union , trade union , ecology , archaeology , biology , history
This paper examines the introduction of monopolistic competition into wage bargaining models: in addition to capital‐labour substitution, we also consider a cost‐push effect. The right‐to‐manage model requires strong restrictions on the objective functions and leads to problematic conclusions because the wage claims of the union are generally not compatible with the mark‐up requirement contained in the firm's price equation. In the efficient bargaining model, the union negotiates also the employment level, which gives it a way of extracting part of the monopoly rent: the firm's commitment to an efficient wage‐employment combination forces it to follow a pricing rule such that part of the surplus is transferred to the union.