Union negotiations, product market cooperation, and profits

Abstract

Within the context of a unionized duopoly with decentralized Right‐to‐Manage wage negotiations, this paper investigates how different measures of product market cooperation impact firms' profitability. In the presence of exogenous production costs, a classical result in industrial economics is that conjectural derivatives (CD) and conjectural elasticities (CE) lead to similar results, and CE reproduce exactly the same output decision level (and, therefore, profits) of the coefficient of cooperation (CC). These results show that wage bargaining alters those relations; in particular, the equivalence of the CE and CC no longer holds true.

The Nash bargaining solution in labor market analysis

“…Recent applications includeAlbert and Meckl (2003),Bhattacharyya and Gupta (2015),Buccella and Wang (2021),Chaudhuri (2016),Cogliano et al (2016), de Pinto and Lingen (2019),Dobbelaere and Kiyota (2018),Falch (2001),Fanti and Buccella (2019),Fuest and Thum (2001),Jayadev (2007),Julius (2009),Kraft et al (2011),Lechthaler and Snower (2012),Merkl and Schmitz (2011),Montagna and Nocco (2015),Meccheri and Fanti (2018) Sattinger and Hartog (2013),Tavani (2012Tavani ( , 2013 andZiesemer (2005).…”