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Union Duopoly with Heterogeneous Labour: The Effect of Wage Ceilings

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  • Ana Paula Martins

Abstract

This research analyzes the labor market outcome when there are two unions in the industry, representing heterogeneous workers - substitutes or complements in production - and using wage strategies, in the presence of wage regulation. Three strategic environments are considered: symmetric Bertrand-Nash duopoly, Stackelberg duopoly and efficient cooperation between the two unions. We discuss the case of the imposition of a wage ceiling, oriented towards increase employment. In fact, this is the general result obtained. We also inspect if it may be optimal for a Stackelberg leading union to push the other to the bound.

Suggested Citation

  • Ana Paula Martins, 2015. "Union Duopoly with Heterogeneous Labour: The Effect of Wage Ceilings," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 58(2), pages 27-51.
    • Handle: RePEc:eei:journl:v:58:y:2015:i:2:p:27-51
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    More about this item

    Keywords

    Unions; wage determination models; union bargaining; corporatism; imperfect competition and union behaviour; union oligopoly; wage ceilings; wage controls.;
    All these keywords.

    JEL classification:

    • C79 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Other
    • D49 - Microeconomics - - Market Structure, Pricing, and Design - - - Other
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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