Direkt zum Inhalt

Raising Rivals' Fixed (Labor) Costs: The Deutsche Post Case

Discussion Papers 1008, 31 S.

Sven Heitzler, Christian Wey

2010

get_appDownload (PDF  222 KB)

Abstract

We analyze the bargaining problem of an incumbent firm and a union when the wage contract becomes generally binding. Our main application relates to competition among operators of mail delivery networks. We describe the Deutsche Post case which highlights the raising rivals' costs incentive and its consequences resulting from labor laws that make collective agreements generally binding. We show that minimum wages implemented by means of extension regulation are an effective deterrence instrument which frustrates both market entry as well as investments into the build-up of a mail delivery network.



JEL-Classification: L12;J52;K31
Keywords: Minimum wages, postal services, collective bargaining, raising rivals' costs
Frei zugängliche Version: (econstor)
http://hdl.handle.net/10419/36730

keyboard_arrow_up