Munich Personal RePEc Archive

Bargaining agenda in public and private monopoly.

Fanti, Luciano and Buccella, Domenico (2015): Bargaining agenda in public and private monopoly.

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Abstract

This paper analyses the choice of the bargaining agenda in a public/private unionised monopoly. Both the public and private monopolist always prefers the Right-To-Manage (RTM) to the Efficient Bargaining (EB) agenda. Private monopoly is socially preferred to the public one and conflict of interests on the preferred agenda arises between Government on one side and workers and consumers on the other side. In case of threat of market entry, the public (private) monopolist may strategically commit to RTM (EB) to deter entrance. If RTM is the ex-ante industry practice, a public incumbent company cannot use the EB agenda as a strategic tool to deter entry, while an incumbent private company can use it. An opposite result holds when EB is the established practice in the industry: the incumbent public company can use RTM to deter entry, while the incumbent private company cannot. The social welfare implications are analysed.

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