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Managerial Delegation Contracts under Centralized Unionization

Authors

  • Nicola Meccheri,

    Corresponding author
    1. Department of Economics and Management, University of Pisa, Pisa, Italy
    2. RCEA, The Rimini Centre for Economic Analysis, Rimini, Italy
    • Correspondence to: Department of Economics and Management, University of Pisa, Via C. Ridolfi 10, I-56124 Pisa, Italy. E-mail: meccheri@ec.unipi.it

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  • Luciano Fanti

    1. Department of Economics and Management, University of Pisa, Pisa, Italy
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Abstract

This paper studies how alternative managerial delegation contracts in a duopoly product market interact with wage decisions taken by a central (industry-wide) union in the labor market. Interestingly, results prove to be more varied with respect to findings by the managerial delegation literature with exogenous production costs. Most notably, it is pointed out that, in equilibrium, both firm profitability and welfare outcomes can be superior under both sales delegation and relative profit delegation, depending on various factors such as the degree of product differentiation and the competition regime. Copyright © 2013 John Wiley & Sons, Ltd.

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