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Market Shares of Price Setting Firms and Trade Unions

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  • Thomas Grandner

    (Department of Economics, Vienna University of Economics & B.A.)

Abstract

In a unionized duopoly with price setting firms market shares in different wage determination settings are analyzed. I compare decentralized, centralized and sequential wage determination. In the decentralized setting the union in the more productive firm can exploit the differences in productivity for rising local wages. The rising wages in the more productive firm result in smaller differences of unit costs, therefore the market shares are split more equally in the decentralized setting than with centralized wage determination. Sequential wage determination results in an asymmetric outcome. Compared with the simultaneous case the market share of the wage-leader firm is smaller, because the competitor is able to undercut the wage. Additionally with sequential wage determination the union representing the workers of the more productive firm cannot exploit the productivity advantage by raising the wage rate by the same extent as in the simultaneous case.

Suggested Citation

  • Thomas Grandner, 1998. "Market Shares of Price Setting Firms and Trade Unions," Department of Economics Working Papers wuwp061, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp061
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    References listed on IDEAS

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    More about this item

    Keywords

    Market shares; Wage determination;

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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