Union power and product market competition: evidence from the airline industry

Arbeitspapier

In this paper we specify and estimate a structural model which links product market competition and union power. The model has a two-stage in which are determined through bargening between management and unions in the first stage, with a price-setting market game to follow in the second stage. Using data for eight European airlines from 1976-1994, we provide evidence on price-cost margins and the measurement of market power in a model of rent sharing. In particular, we provide evidence on the amount of rent being shifted and its impact on prices, wages, and consumer surplus. According to our estimates, the inefficiency resulting from rent-shifting is only 1.2 cents for every dollar of rent shifting. In this sense, the static impact of unions is largely on equity and less on efficiency: the winners are the unions and the losers the consumer, while economic efficiency is relatively unaffected.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: WZB Discussion Paper ; No. FS IV 99-5

Classification and Topics

• Classification: Wirtschaft

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Neven, Damien J. ; Röller, Lars-Hendrik ; Zhang, Zhentang
• Event: Veröffentlichung
• (who): Wissenschaftszentrum Berlin für Sozialforschung (WZB)
• (where): Berlin
• (when): 1999

Further information

• Handle: http://hdl.handle.net/10419/51039
• Last update: 10.03.2025, 11:42 AM CET