Corporate Social Responsibility and Wage Discrimination in Unionized Oligopoly

The European labour markets are characterized by the existence of trade unions with extensive coverage whereas wage contracts are typically determined through decentralized firm-union bargaining. On the other hand, as it particularly refers to migrant and ethnic minority groups, equally-skilled workers often face lower reservation wages. We argue that these facts may lead unions to opt for discriminatory wage contracts across groups of employees. At the same time firms may nonetheless opt for non-discrimination in wages insofar as they would profitably “advertise” it as an exertion of corporate social responsibility (csr). We show that, if the consumers’ valuation of non-discrimination is sufficiently high, the latter strategies would as well be compatible with the unions’ best interest in the equilibrium. Otherwise, we propose that to efficiently combat wage discrimination policy makers should instead of firms undertake csradvertisement in the event of non-discrimination. Yet, such an antidiscrimination policy would always entail a net loss in social welfare.Unions, Oligopoly, Discriminatory Wage Contracts, Antidiscrimination Policy, Corporate Social Responsibility.

Equilibrium Mode of Competition in Unionized Oligopolies: Do Unions Act as Commitment Devices to Cournot Outcomes?

In contrast with previous studies, we postulate that there is no ex-ante commitment over the type of contract (i.e., price or quantity) which a firm offers consumers. In the context of a unionized symmetric duopoly we instead argue that the mode of competition which in equilibrium emerges is the one that entails the most beneficial outcome for both the firm and its labour union, in each firm/union pair, given the choice of the rival pair. Our findings suggest that monopoly unions with risk-averse/neutral members may effectively act as commitment devices driving firms to the symmetric Cournot mode of competition.Oligopoly, Monopoly unions, Equilibrium mode of competition

A Union-Oligopoly Model of Endogenous Discrimination:Should it be wage discrimination taxed or discriminated employment subsidized?

In the context of a homogenous good industry with Cournot rivalry and technological asymmetries among firms, equally skilled workers can be grouped according to their different reservation wages. Under decentralized firm-union bargaining, we show that unions may offer to firms the option to discriminate wages across such groups of employees and, by that, to achieve cost sub-additivity in the equilibrium. We subsequently propose that to combat the emerging wage discrimination a benevolent policy maker may activate either taxation, or subsidization, policy. Interestingly, while the former policy always entails a welfare loss, a welfare gain may emerge under the latter policy, relative to the no policy-wage discrimination status quo. Thus our findings suggest that the E.U- antidiscrimination directives may prove to be effective on both egalitarian and efficiency grounds.Unions, Oligopoly, Discriminatory Wage Contracts, Antidiscrimination Policy

Ethnic Discrimination in the Greek Labour Market: Occupational Access, Insurance Coverage, and Wage Offers

The paper investigates whether low skilled male Albanians face unequal treatment in the Greek labour market, two years after the national adoption of the European anti-discrimination employment legislation. By means of a Correspondence Test we have estimated that Albanians face 43.5% net discrimination of access to occupations. Concentrating on the equal chance cases, we subsequently found that Albanians face 36.5% less chance of being registered with insurance coverage, while their potential wage contracts are on the average 8.8% below those of Greeks, and 5.3% below the legal minimum wage. As it comes to the reasons for wage discrimination, using an indirect approach we interestingly found that the employers themselves “put the blame” on profit strategies (84.4%), on statistical discrimination (9.6%), and on taste discrimination (7.8%).Field Experiment, Ethnic Discrimination., Hiring Discrimination, Insurance Coverage, Wage Inequality

Endogenous wage-bargaining institutions in oligopolistic industries.

This paper develops a framework of endogenous formation of wage-bargaining institutions regarding the level at which unions and firms negotiate in industries with market power. We show that economic factors, such as asymmetries in productive efficiency and bargaining power, are responsible for the en~ ',gence of various degrees of bargaining centralization. An all unionefficient firms majorit) coalition typically establishes an extra stage of wage negotiations at the sectorial level. If, for given bargaining powers, the productivity differences are sufficiently high, wage negotiations are also conducted at firm-level. Otherwise, the (minimum) wage bargain struck at the sectorial level is simply confirmed by both, firms and unions. This is a case of complete bargaining centralization. If, however, technological and bargaining power asymmetries cancel out, wage negotiations are conducted only at the firm level (decentralized bargaining).Bargaining institutions; Oligopoly; Minimum wage; Majority coalition;

Downstream Mode of Competition With Upstream Market Power

In contrast with previous studies we assume no ex-ante commitment over the �price or quantity� type of contract which downstream firms will independently offer consumers in a two-tier oligopoly. Under competing vertical chains, we propose that the downstream mode of competition which in equilibrium emerges is the outcome of independent implicit agreements, between each downstream firm and its exclusive input supplier, in each vertical chain. Our findings suggest that input suppliers may thus act as commitment devices sufficient to endogenously sustain the quantity (Cournot) mode of competition.Oligopoly; Vertical relations; Wholesale prices; Equilibrium mode of competition

Endogenous scope of bargaining in oligopoly.

In this paper the scope of firm-union decentralized bargaining is shown to be endogenously determined in industries with market power. We consider a homogenous industry where firms compete in quantities. Efficient Bargains may only occur if both, the firm and its own union, unanimously agree to negotiate over employment as well as wages. Right-to-Manage bargaining takes place, if either the firm or its union choose to bargain only over wages, leaving employment decision at the firm's discretion. We show that Right-to-Manage emerges, as a subgame perfect equilibrium bargaining institution, only if the union's bargaining power is sufficiently high. If, however, the union's bargaining power is low enough, Efficient Bargains is always chosen by a subset of firm/union pairs. A firm/union pair prefers to conduct Efficient Bargains, because the firm can thus commit to a particulary quantity, and hence enjoy a sufficient portion ofthe Stackelberg leader's profits in the product market.Scope of Bargaining; Oligopoly; Efficient Bargains; Stackelberg Game;

Endogenous wage-bargaining institutions in oligopolistic industries

This paper develops a framework of endogenous formation of wage-bargaining institutions regarding the level at which unions and firms negotiate in industries with market power. We show that economic factors, such as asymmetries in productive efficiency and bargaining power, are responsible for the en~ ',gence of various degrees of bargaining centralization. An all unionefficient firms majorit) coalition typically establishes an extra stage of wage negotiations at the sectorial level. If, for given bargaining powers, the productivity differences are sufficiently high, wage negotiations are also conducted at firm-level. Otherwise, the (minimum) wage bargain struck at the sectorial level is simply confirmed by both, firms and unions. This is a case of complete bargaining centralization. If, however, technological and bargaining power asymmetries cancel out, wage negotiations are conducted only at the firm level (decentralized bargaining)

Endogenous scope of bargaining in oligopoly

In this paper the scope of firm-union decentralized bargaining is shown to be endogenously determined in industries with market power. We consider a homogenous industry where firms compete in quantities. Efficient Bargains may only occur if both, the firm and its own union, unanimously agree to negotiate over employment as well as wages. Right-to-Manage bargaining takes place, if either the firm or its union choose to bargain only over wages, leaving employment decision at the firm's discretion. We show that Right-to-Manage emerges, as a subgame perfect equilibrium bargaining institution, only if the union's bargaining power is sufficiently high. If, however, the union's bargaining power is low enough, Efficient Bargains is always chosen by a subset of firm/union pairs. A firm/union pair prefers to conduct Efficient Bargains, because the firm can thus commit to a particulary quantity, and hence enjoy a sufficient portion ofthe Stackelberg leader's profits in the product market