Market shares of price setting firms and trade unions

Grandner, Thomas (1998) Market shares of price setting firms and trade unions. Department of Economics Working Paper Series, 61. Inst. für Volkswirtschaftstheorie und -politik, WU Vienna University of Economics and Business, Vienna.


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In a unionized duopoly with price setting firms market shares in different wage determination settings are analyzed. I compare decentralized, centralized and sequential wage determination. In the decentralized setting the union in the more productive firm can exploit the differences in productivity for rising local wages. The rising wages in the more productive firm result in smaller differences of unit costs, therefore the market shares are split more equally in the decentralized setting than with centralized wage determination. Sequential wage determination results in an asymmetric outcome. Compared with the simultaneous case the market share of the wage-leader firm is smaller, because the competitor is able to undercut the wage. Additionally with sequential wage determination the union representing the workers of the more productive firm cannot exploit the productivity advantage by raising the wage rate by the same extent as in the simultaneous case.

Item Type: Paper
Keywords: market shares / wage determination
Classification Codes: JEL J50, L13
Divisions: Departments > Volkswirtschaft
Depositing User: Repository Administrator
Date Deposited: 01 Mar 2002 08:55
Last Modified: 09 Mar 2020 14:12


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