Corporate social responsibility and bargaining in unionized markets

Maria Alipranti, Constantine Manasakis and Emmanuel Petrakis

Journal of Economic Behavior & Organization, 2024, vol. 224, issue C, 949-965

Abstract: We investigate the firms’ and unions’ incentives to engage in socially responsibility activities in a unionized differentiated goods’ duopoly market. The socially responsible attributes attached to products are considered as credence goods, with consumers forming expectations about their existence and level. We show that a Corporate Social Responsibility (CSR) bargaining scheme, in which firms and unions bargain over not only the wage rate but also the level of the firms’ CSR activities, always arises in equilibrium. Incorporating CSR activities into the union–firm bargaining agenda acts as a commitment device that credibly signals to consumers the level of CSR activities undertaken by firms. The market equilibrium leads to the highest social welfare; thus, market and societal incentives are aligned.

Keywords: Labor unions; Corporate social responsibility; Credence good; Negotiations; Bargaining agenda; Oligopoly (search for similar items in EconPapers)
JEL-codes: J33 J52 L13 L22 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:224:y:2024:i:c:p:949-965

DOI: 10.1016/j.jebo.2024.06.032

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