Discussion Paper Details

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Title: Regulation with Wage Bargaining

Author(s): Dag Morten Dalen, Espen R Moen and Nils-Henrik M Von der Fehr

Publication Date: February 2003

Keyword(s): regulation and wage bargaining

Programme Area(s): Industrial Organization

Abstract: In many regulated industries labour unions are strong and there is clear empirical evidence of labour rent-sharing. In this Paper, we study optimal regulation in a model in which wages are determined endogenously by wage bargaining at the firm level. A seemingly robust conclusion, at least when worker bargaining power is considerable, is that incentives for cost efficiency should be stronger than in the standard case in which wages do not depend on the regulatory regime.

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Bibliographic Reference

Dalen, D, Moen, E and Von der Fehr, N. 2003. 'Regulation with Wage Bargaining'. London, Centre for Economic Policy Research.