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Union duopoly with heterogeneous labor: the effect of minimum wage regulation

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  • Ana Paula Martins

Abstract

Purpose - The purpose of this paper is to analyse 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 minimum wage regulation. Design/methodology/approach - Three strategic environments are considered: symmetric Bertrand‐Nash duopoly, Stackelberg duopoly, and efficient cooperation between the two unions. Findings - Usually, minimum wage legislation (floor) would decrease employment; it is shown that in Stackelberg environment, minimum wage legislation may induce an increase in total employment. Wage‐pushing strategies by a leader may also arise; and if workers are substitutes, entry deterrence strategies by the leader may be observed. Originality/value - This paper analyses the impact of minimum wages in duopoly scenarios in an extensive way.

Suggested Citation

  • Ana Paula Martins, 2009. "Union duopoly with heterogeneous labor: the effect of minimum wage regulation," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 36(5), pages 580-607, April.
    • Handle: RePEc:eme:ijsepp:v:36:y:2009:i:5:p:580-607
    DOI: 10.1108/03068290910954040
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    References listed on IDEAS

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    1. Ken Binmore & Ariel Rubinstein & Asher Wolinsky, 1986. "The Nash Bargaining Solution in Economic Modelling," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 176-188, Summer.
    2. Oswald, Andrew J, 1979. "Wage Determination in an Economy with Many Trade Unions," Oxford Economic Papers, Oxford University Press, vol. 31(3), pages 369-385, November.
    3. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    4. Bresnahan, Timothy F, 1981. "Duopoly Models with Consistent Conjectures," American Economic Review, American Economic Association, vol. 71(5), pages 934-945, December.
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    Cited by:

    1. Pontus Braunerhjelm & Sameeksha Desai & Johan Eklund, 2015. "Regulation, firm dynamics and entrepreneurship," European Journal of Law and Economics, Springer, vol. 40(1), pages 1-11, August.

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