Summary.
This paper explores the endogenous emergence of wage bargaining institutions in a union-oligopoly framework. Technological asymmetries among firms are shown to be the driving force for the emergence of alternative wage bargaining centralization structures that are observable in real life. As wage deals at the sector-level obtain the consensus of all unions and the efficient firms, a regulator has an incentive to authorize those deals by activating/establishing a Minimum Sectoral Wage Institution(MSWI). If productivity differences are high enough, wage setting above the established wage floor may subsequently occur in efficient firms. Otherwise, a completely centralized wage bargaining structure emerges and the sector-level wage deal is simply confirmed as the firms’ wage rate. If, however, productivity asymmetries are rather insignificant, firms and unions have conflicting interests and a completely decentralized wage bargaining regime prevails in equilibrium.
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Received: 17 December 2001, Revised: 9 June 2003,
JEL Classification Numbers:
J50, J31, L13.
Correspondence to: Emmanuel Petrakis
Particular appreciation is expressed to an anonymous referee who has greatly helped us to improve our work upon an earlier draft of this paper. We also wish to thank T. Kollinzas, J. Padilla, H. Bester, J. Sakovics, K. Uwe-Kühn, J. J. Dolado, J. L. Ferreira, A. Matsui and C. Martinelli for their helpful comments and suggestions.
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Petrakis, E., Vlassis, M. Endogenous wage bargaining institutions in oligopolistic sectors. Economic Theory 24, 55–73 (2004). https://doi.org/10.1007/s00199-003-0410-3
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DOI: https://doi.org/10.1007/s00199-003-0410-3