Unions in oligopolistic, vertically connected industries

Grandner, Thomas (1999) Unions in oligopolistic, vertically connected industries. Working Papers Series "Growth and Employment in Europe: Sustainability and Competitiveness", 7. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.


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A model of two unionized, vertically connected oligopolistic industries is analyzed. Economic performance, measured by consumer prices, depends on the institutional setting of wage bargaining. Two externalities may occur, namely an integration and a competition externality, which have contrary effects. With decentralized bargaining no externalities can be internalized resulting in low consumer prices. With bargaining at the industry level only the competition externality is internalized resulting in high prices. With centralized bargaining both externalities can be internalized resulting again in low prices. With at least two firms in each industry, the decentralized setting performs best. Performance improves with an increase in the competition of the product markets.

Item Type: Paper
Keywords: vertical industry structure / Unions / wage determination
Classification Codes: JEL L13, J50, J31
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 17 May 2002 13:44
Last Modified: 09 Mar 2020 14:11
URI: https://epub.wu.ac.at/id/eprint/1240


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