Wage Bargaining with a Price-Making Firm : Right-to-Manage and Efficient Bargaining
(1990) , 15 pages
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- Abstract
- 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.
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Arnsperger, C., & De la Croix, D. (1990). Wage Bargaining with a Price-Making Firm : Right-to-Manage and Efficient Bargaining (Econ Working Paper 9007). https://hdl.handle.net/2078.5/52341