Environmental Taxes and Wage Setting Structure

Abstract

Abstract:The literature on the environment shows that imperfect competition in global markets creates a strategic interaction between governments that can lead to the ineficient distortion of environmental taxes. This literature does not consider that workers can set up different organizational structures to set wages. We assume that under decentralized wage setting there is an independent union in each irm while under centralized wage setting there is an industry-wide union that sets the wages of all irms. We show that under a decentralized structure governments choose environmental taxes closer to those which are socially eficient than those chosen under a centralized structure. However, environmental damage is greater in the former case.

Managerial firms’ profitability, unions, and environmental taxes

“…About the latter point (unionized labour markets), Bárcena‐Ruiz (2011) and Bárcena‐Ruiz and Garzón (2003, 2009) consider different organizational structures of workers setting wages on the environmental taxes and standards, the preferences of governments, and the location of polluting firms in the context of profit‐maximizing firms (i.e., without managers).…”

‘Green’ managerial delegation theory

“…Other works analysed and extended the basic framework of oligopolistic rivalry by assuming either unionised oligopolies (Bárcena-Ruiz and Garzón, 2003, 2009; Bárcena-Ruiz, 2011) or (as our paper does) the separation between ownership and control by introducing managerial delegation contracts. The pioneering work of Bárcena-Ruiz and Garzón (2002) studied the strategic effects of delegating to managers a firm's sales and pollution abatement in the presence of environmental tax and damage by considering a competitive labour market and homogeneous products.…”

The Impact of Cross-Industry Pollution, Consumer Environmental Awareness, and Corporate Social Responsibility on Industrial Environmental Policies

“…where r w is the legal (reserved) wage in the market and θ is the degree to which the union values wages, which is a similar setting to that in the works of Booth (1995), Leahy and Montagna (2000), Lommerud et al (2003), Bárcena-Ruiz ( 2003), Haucap and Wey (2004), Bárcena-Ruiz and Garzón (2009), and Choi (2011). We assumed 1 θ = , which means that the union attaches equal importance to the negotiating wages and the number of employees.…”