Is Corporatism Feasible?

20 Pages Posted: 2 May 2007

See all articles by Nicola Acocella

Nicola Acocella

University of Rome I - Department of Methods and Models for Economics, Territory and Finance (MEMOTEF)

Giovanni Di Bartolomeo

Sapienza University of Rome, Department of Economics and Law

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Abstract

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, as 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, however, is beyond the scope of this paper.

Suggested Citation

Acocella, Nicola and Di Bartolomeo, Giovanni, Is Corporatism Feasible?. Metroeconomica, Vol. 58, No. 2, pp. 340-359, May 2007. Available at SSRN: https://ssrn.com/abstract=981599 or http://dx.doi.org/10.1111/j.1467-999X.2007.00271.x

Nicola Acocella (Contact Author)

University of Rome I - Department of Methods and Models for Economics, Territory and Finance (MEMOTEF) ( email )

Via del Castro Laurenziano 9
Roma, Roma 00161
Italy
+390649766359 (Phone)

HOME PAGE: http://www.memotef.uniroma1.it/newdip/utenti/acocellanicola/

Giovanni Di Bartolomeo

Sapienza University of Rome, Department of Economics and Law ( email )

via Castro del Laurenziano 9
Roma, 00191
Italy

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