Union duopoly with homogeneous labor: The effect of membership and employment constraints

Ana Paula MARTINS

Abstract


Abstract. This research analyzes the labor market outcome when there are two unions in the industry, representing homogeneous workers (hence, unions use employment strategies), in the presence of union employment (quantity) constraints. Three strategic environments are considered: Nash-Cournot duopoly, Stackelberg duopoly and efficient cooperation between the two unions. Employment constraints -ceilings and floors- originate kinks and/or discontinuities in the reaction functions, leading to corner solutions and special features of the labor market equilibrium. Two types of constraints are discussed. One is insufficient employed membership (ceiling) for the interior solution. Then it may be optimal for a Stackelberg leader to push the other to the bound. The other case considered is the legal requirement of a minimum number of employed members that the union must have to be constituted. Entry-deterrence strategies of the leading union may then emerge.

Keywords. Unions, Wage determination models, Union bargaining, Corporatism, Imperfect competition and union behavior, Union oligopoly, Union membership, Union representativeness, Occupational licensure.

JEL. J51, E24, D45, D49, C79.

Keywords


Unions; Wage determination models; Union bargaining; Corporatism; Imperfect competition and union behavior; Union oligopoly; Union membership; Union representativeness; Occupational licensure.

Full Text:


References


Adnett, N. (1996). European Labor Markets. Addison Wesley Longman.

Bertrand, J. (1883). "Review." Journal des Savants, 68, 499-508.

Bettencourt, P.O., & Baptista, A.M. (1999). Legislação do Trabalho. 5th Edition. Lisboa: Quid Juris.

Binmore, K., Rubinstein, A., & Wolinsky, A. (1986). The Nash bargaining solution in economic modelling. Rand Journal of Economics, 17(2), 176-88. doi. 10.2307/2555382

Bowley, L. (1924). The Mathematical Groundwork of Economics. Oxford University Press.

Bresnahan, T.F. (1981). Duopoly models with consistent conjectures. American Economic Review, 71(5), 507-517.

Calmfors, L. (1993). Centralization of wage bargaining and macroeconomic performance. Stockholm: Seminar Paper, No.536. [Retrieved from].

Calmfors, L., & Driffill, J. (1988). Bargaining structure, corporatism and macroeconomic performance. Economic Policy, 3(6), 13-61. doi. 10.2307/1344503

Carruth, A.A., & Oswald, A.J. (1987). On union preferences and labour market models: Insiders and outsiders. Economic Journal, 97(386), 431-45. doi. 10.2307/2232888

Cerdeira, M.C. (1997). A Evolução da Sindicalização Portuguesa de 1974 a 1995. Lisboa: Ministério para a Qualificação e o Emprego, CICT.

Corneo, G.G. (1993). Idiosyncratic wage bargaining in an oligopolistic single market. Fifth EALE Annual Conference, 30th September - 3rd October, Maastricht.

Cournot, A. (1838). Researches into the Mathematical Principles of the Theory of Wealth. Paris: Hachette.

Davidson, C. (1988). Multiunit bargaining in oligopolistic industries. Journal of Labor Economics, 6(3), 397-422. doi. 10.1086/298189

Dixit, A. (1979). A model of duopoly suggesting a theory of entry barriers. Bell Journal of Economics, 10(1), 20-32. doi. 10.2307/3003317

Dixit, A. (1980). The role of investment in entry-deterrence. Economic Journal, 90(357), 95-106. doi. 10.2307/2231658

Dixon, H. (1988). Unions, oligopoly and the natural range of employment. Economic Journal, 98(393), 1127-1147. doi. 10.2307/2233723

Dobson, P.W. (1994). Multifirm unions and the incentive to adopt pattern bargaining in oligopoly. European Economic Review, 38(1), 87-100. doi. 10.1016/0014-2921(94)90007-8

Dowrick, S. (1989). Union-oligopoly bargaining. Economic Journal, 99(398), 1123-1142. doi. 10.2307/2234092

Dunlop, J.T. (1944). Wage Determination Under Trade Unions. New York: Macmillan Co.

Earle, J.S., & Pencavel, J. (1990). Hours of work and trade unionism. Journal of Labor Economics, 8(1), S150-174. doi. 10.1086/298248

Farber, H.S. (1986). The analysis of union behavior. In Handbook of Labor Economics., Vol II, edited by O. Ashenfelter and R. Layard.

Friedman, J. (1983). Oligopoly Theory. Cambridge: Cambridge University.

Friedman, M. (1982). Capitalism and Freedom. Chicago: The University of Chicago Press.

Grossman, G.M. (1983). Union wages, temporary lay-offs, and seniority. American Economic Review. Reprinted in Economic Models of Trade Unions, edited by P. Garonna, P. Mori and P. Tedeschi. Chapman & Hall, 1992.

Gylfason, T., & Lindbeck, A. (1984a). Competing wage claims, cost inflation and capacity utilization. European Economic Review, 24(1), 1-21. doi. 10.1016/0014-2921(84)90010-2

Gylfason, T., & Lindbeck, A. (1984b). Union rivalry and wages: An oligopolistic approach. Economica, 51(202), 129-139. doi. 10.2307/2554205

Hart, O. (1982). A model of imperfect competition with Keynesian features. Quarterly Journal of Economics, 97(1), 109-138. doi. 10.2307/1882629

Hendricks, W.E., & Khan, L.M. (1982). The determinants of bargaining structure in U.S. manufacturing industries. Industrial and Labor Relations Reviews, 35(2), 181-195. doi. 10.1177/001979398203500202

Horn, H., & Wolinsky, A. (1988). Worker substitutability and patterns of unionisation. Economic Journal, 98(391), 484-497. doi. 10.2307/2233379

Johnson, G.E. (1990). Work rules, featherbedding, and Pareto-optimal union-management bargaining. Journal of Labor Economics, 8(1), S237-259. doi. 10.1086/298251

Jun, B.H. (1989). Non-cooperative bargaining and union formation. Review of Economic Studies, 56(1), 59-76. doi. 10.2307/2297749

Leontief, W.W. (1946). The pure theory of the guaranteed annual wage contract. Journal of Political Economy, 54(1), 76-79. doi. 10.1086/256311

Lewis, H.G. (1959). Competitive and monopoly unionism. In P. Bradley, (Ed.), The Public Stake in Union Power. (pp.181-208), Charlottesville, Virginia: University of Virginia Press, 181-208.

Lindbeck, A., & Snower, D.J. (1990). The Insider-Outsider Theory of Employment and Unemployment. Macmillan.

MaCurdy, T.E., & Pencavel, J.H. (1986). Testing between competing models of wage and employment determination in unionized markets. Journal of Political Economy, 94(3), S3-S39. doi. 10.1086/261398

Martin, S. (1993) Advanced Industrial Economics. Cambridge: Blackwell.

Martins, A.P., & Coimbra, R. (1997). Union duopoly with homogeneous labor. Working Paper, No.84.97. Lisboa, Universidade Católica Portuguesa.

Martins, A.P., & Coimbra, R. (1997a). Union oligopoly and entry in the presence of homogeneous labor. Working Paper, No. 85.97. Lisboa, Universidade Católica Portuguesa.

McDonald, I.M., & Solow, R.M. (1981). Wage bargaining and employment. American Economic Review, 71(5), 896-908.

Mori, P.A., & Tedeschi, P. (1992). Economic models of trade unions: An introduction. In Economic Models of Trade Unions, P. Garonna, P. Mori and P. Tedeschi. Chapman & Hall, 1992.

Nash, J.F. (1950). The bargaining problem. Econometrica, 18(2), 155-162. doi. 10.2307/1907266

Nash, J.F. (1953). Two-person cooperative games. Econometrica, 21(1), 128-140. doi. 10.2307/1906951

Nickell, S.J., & Andrews, M. (1983). Unions, real wages and employment in Britain 1951-79. Oxford Economic Papers, 35, 183-206. doi. 10.1093/oxfordjournals.oep.a041610

Oswald, A.J. (1979). Wage determination in an economy with many trade unions. Oxford Economic Papers, 31(3), 369-385. doi. 10.1093/oxfordjournals.oep.a041454

Oswald, A.J. (1982). The microeconomic theory of the trade union. Economic Journal, 92, 576-95. doi. 10.1007/BF02299147

Prazeres, F. (2001). Contratação Colectiva. In Trabalho e Relações Laborais, edited by António Oliveira das Neves. Oeiras: Celta Editora.

Rosen, S. (1970). Unionism and the occupational wage structure in the United States. International Economic Review, 11(2), 269-286. doi. 10.2307/2525669

Rubinstein, A. (1982). Perfect equilibrium in a bargaining model. Econometrica, 50(1), 97-109. doi. 10.2307/1912531

Schmalensee, R.C. (1981). Economies of scale and barriers to entry. Journal of Political Economy, 89(6), 1228-1238. doi. 10.1086/261031

Spence, A.M. (1977). Entry, capacity, investment oligopolistic pricing. Bell Journal of Economics, 8(2), 534-544. doi. 10.2307/3003302

Tantarelli, E. (1986). The regulation of inflation and unemployment. Industrial Relations, 25(1), 1-15. doi. 10.1111/j.1468-232X.1986.tb00664.x

Ulph, A., & Ulph, D. (1990). Union bargaining: A survey of recent work. In Current Issues in Labour Economics, edited by D. Sapsford & Z. Tzannatos, Macmillan.

Varian, H.R. (1978) Microeconomic Analysis. New York: Norton.

von Stackelberg, H. (1934). Marktform und Gleichgewicht. Vienna: Julius Springer.




DOI: http://dx.doi.org/10.1453/jeb.v7i3.2112

Refbacks

  • There are currently no refbacks.


.......................................................................................................................................................................................................................................................................................................................................

Journal of Economics Bibliography - J. Econ. Bib.  - JEB - www.kspjournals.org

ISSN: 2149-2387.

Editor: jeb@ksplibrary.org  Secretarial: secretarial@ksplibrary.org  Istanbul - Turkey.

Copyright © KSP Library