Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing

Sabien Dobbelaere

No 1466, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper extends Hall's (1988) methodology to analyse imperfections in both the product and the labour market for firms in the Belgian manufacturing industry over the period 1988-1995. We investigate the heterogeneity in price-cost mark-up and workers' bargaining power parameters among 18 sectors within the manufacturing industry as well as the relationship between both parameters. Using a sample of more than 7 000 firms, our GMM results indicate that ignoring imperfection in the labour market leads to an underestimation in the price-cost margin evaluated at perfect competition in the labour market. These findings are confirmed in the sectoral analysis. Sectors with higher workers' bargaining power typically show higher price-cost margins.

Keywords: bargaining power; market power; price-cost margins; efficient bargaining (search for similar items in EconPapers)
JEL-codes: C23 D21 J50 L13 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2005-01
New Economics Papers: this item is included in nep-bec and nep-com
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Citations: View citations in EconPapers (10)

Published - published in: International Journal of Industrial Organization, 2004, 22(10), 1381-1398

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Working Paper: Joint Estimation of Price-Cost Margins and Union Bargaining Power for Belgian Manufacturing (2003)
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