Is Corporatism Feasible?
Giovanni Di Bartolomeo
Sapienza University of Rome, Department of Economics and Law
Department of Methods and Models for Economics, Territory and Finance
This paper investigates the effects of cooperation (corporatism) on macroeconomic performance by considering a rather standard policy game between the government and a monopoly union. We stress the shortcomings of the traditional way used to model cooperation in policy games (the maximization of the weighted sum of players' preferences), which only approximates the Nash product solution. We find that it is difficult to implement corporatism, although it generally increases social welfare, since it often reduces the union's utility. In particular, we show that an inflation-neutral union will never find it profitable to cooperate with the government, unless side-payments are considered. The study of this issue is however beyond the scope of this paper.
Number of Pages in PDF File: 21
Keywords: Employment, inflation, trade unions, government, corporatism, policy game, feasibility
JEL Classification: E24, E61, E31, E58, J51
Date posted: January 30, 2006