Government's Preference and Timing of Endogenous Wage Setting: Perspectives on Privatization and Mixed Duopoly

Choi, Kangsik (2009): Government's Preference and Timing of Endogenous Wage Setting: Perspectives on Privatization and Mixed Duopoly.

Abstract

This study investigates social welfare and privatization depending on the government's preference for tax revenues and the timing of wage setting in either a unionized-mixed or a unionized-privatized duopolistic market. We show that bargaining over wages is always sequential regardless of who decide the timing of endogenous wage setting and market type except for the following cases; (i) there cannot be any sustained equilibrium or (ii) any timing can be sustained as an equilibrium. Moreover, if the government's preference for tax revenues is sufficiently large, the privatization of the public firm is harmful in terms of both social welfare and government's payoff whether the wage setting is simultaneous or not. However, if the government's preference for tax revenues is sufficiently small, there can exist incongruence regarding privatization between the public firm and the government.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endogenous Wage Setting, Government's Preference, Social Welfare, Tax, Privatization.
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C79 - Other; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets; J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J51 - Trade Unions: Objectives, Structure, and Effects; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L33 - Comparison of Public and Private Enterprises and Nonprofit Institutions ; Privatization ; Contracting Out; H - Public Economics > H4 - Publicly Provided Goods > H44 - Publicly Provided Goods: Mixed Markets

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