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6 - Collusion on Wages and Terms of Employment

Published online by Cambridge University Press:  08 February 2024

Brianna L. Alderman
Affiliation:
Harvard University, Massachusetts
Roger D. Blair
Affiliation:
University of Florida
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Summary

In this chapter, we present an economic model of employer collusion that explores the economic consequences of concerted efforts to depress wages and other forms of compensation. This chapter spells out the organizational challenges of building and implementing an employer cartel. It also examines the incentives to cheat on the cartel agreement. Our central focus is on the harm done to employees as well as the impact on social welfare.

In this chapter, we review an assortment of antitrust cases that alleged collusion on the wages paid and other terms of employment. These examples include hospital nurses, temporary duty nurses, college athletes, and highly talented college students. Finally, we explore the unintended consequences of collusion in the labor market – higher prices for consumers.

Type
Chapter
Information
Monopsony in Labor Markets
Theory, Evidence, and Public Policy
, pp. 81 - 104
Publisher: Cambridge University Press
Print publication year: 2024

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