Government's Preference and Timing of Endogenous Wage Setting: Perspectives on Privatization and Mixed Duopoly

Kangsik Choi

MPRA Paper from University Library of Munich, Germany

Abstract: This study investigates social welfare and privatization depending on the government's preference for tax revenues and the timing of wage setting in either a unionized-mixed or a unionized-privatized duopolistic market. We show that bargaining over wages is always sequential regardless of who decide the timing of endogenous wage setting and market type except for the following cases; (i) there cannot be any sustained equilibrium or (ii) any timing can be sustained as an equilibrium. Moreover, if the government's preference for tax revenues is sufficiently large, the privatization of the public firm is harmful in terms of both social welfare and government's payoff whether the wage setting is simultaneous or not. However, if the government's preference for tax revenues is sufficiently small, there can exist incongruence regarding privatization between the public firm and the government.

Keywords: Endogenous Wage Setting; Government's Preference; Social Welfare; Tax; Privatization. (search for similar items in EconPapers)
JEL-codes: C79 D43 H44 J51 L13 L33 (search for similar items in EconPapers)
Date: 2009-09-10
New Economics Papers: this item is included in nep-gth and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:17221

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