Testing Oligopolistic Behavior within an Efficient Wage Bargaining Model

This paper is devoted to the set up of a conjectural elasticity model with efficient bargaining wages between oligopolistic firms and rent-maximising unions. Based on a production function approach with first-order conditions for factors employment, the model is able to distinguish between output market power and unions market bargaining strength in extracting firms‚ actual surplus. The analysis is conducted at the firm level for four Belgian manufacturing sectors. Conclusion appear to confirm that ˆif any- firm market power tends to be eroded by wages rents, but always with asymetric power in favor of the firm. Market power is also such that it is mainly distributed to the highest market share firms within the industry.