Unions and Wages in Public and Private Firms: A Game-Theoretic Analysis

Gianni De Fraja

Oxford Economic Papers, 1993, vol. 45, issue 3, 457-69

Abstract: This paper studies the effects of product market interaction between private and public (welfare maximizing) enterprises on the wage level agreed upon in the bargaining process of the two firms. It is shown that when a public firm interacts with a private competitor, it is more likely to pay higher wages than the private firm than when the two firms are independent monopolists. If the public firm were privatized, there would be a considerable increase in the wage paid by the private firm. The effects on the wage paid by the privatized firm are ambiguous. Copyright 1993 by Royal Economic Society.

Date: 1993
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