On the incentives to increase input efficiency under monopoly trade unions

Tapan Biswas and Jolian McHardy

Review of Economic Analysis, 2012, vol. 4, issue 1, 39-51

Abstract: (Originally published in the Journal of Economic Behaviour and Organization 2007, 62(4), 657-669) - We examine the effects of and the incentives for increasing input efficiency within a spatially segregated Cournot duopoly with monopoly trade unions whose utility functions depend on both wages and employment. We show that with neoclassical as well as Leontief technology, unions raise wages to appropriate fully the gains from labor-saving technological (or organisational) improvements, leaving the firm with no incentive to invest in increasing the efficiency of workers. However, capital-saving technological improvement may be profitable depending on the elasticity of substitution. Finally, we examine the implication of a fixed minimum wage (or competitive labor market) in one country. - © 2006 Elsevier B.V. All rights reserved.

Keywords: Unions; Technological change; Cournot duopoly (search for similar items in EconPapers)
JEL-codes: D43 J24 J51 L13 O33 (search for similar items in EconPapers)
Date: 2012
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Journal Article: On the incentives to increase input efficiency under monopoly trade unions (2007)
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