Wage Bargaining with a Price-Making Firm Right-to-Manage and Efficient Bargaining

Christian Arnsperger and David de la Croix
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Christian Arnsperger: UNIVERSITE CATHOLIQUE DE LOUVAIN, Department of Economics

No 1990007, LIDAM Discussion Papers IRES from Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES)

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.

Keywords: wages; prices; entreprises; competition; substitution (search for similar items in EconPapers)
Pages: 15
Date: 1990-06-01
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Persistent link: https://EconPapers.repec.org/RePEc:ctl:louvir:1990007

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