Munich Personal RePEc Archive

Modern regulation of firms in developing countries

Jellal, Mohamed (2014): Modern regulation of firms in developing countries.

[img]
Preview
PDF
MPRA_paper_57207.pdf

Download (4MB) | Preview

Abstract

In developing countries, empirical evidence suggests that labor unions entail a positive wage gap for unionized workers, in particular in monopolistic and publicly controlled firms. In this paper, we analyze how the presence of a labor union affects the regulation of a monopoly under asymmetric information. Since part of the informational rent left to the monopolistic firm benefits to the syndicate, we prove that the regulator is induced to lower the rent when the union has a large bargaining power. The net consumers' surplus can either increase or decrease with the firm's bargaining power depending on the firm's effciency type

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.