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Bargaining agenda in a unionised monopoly with network effects: when corporate social responsibility may be welfare-reducing

Luciano Fanti () and Domenico Buccella ()
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Luciano Fanti: University of Pisa

Economia Politica: Journal of Analytical and Institutional Economics, 2017, vol. 34, issue 3, 471-489

Abstract: Abstract This paper investigates the bargaining agenda selection in a socially concerned unionised monopoly producing a network good. We show that the recently established result that under network effects the firm prefers sequential efficient bargaining may be reversed when there are social concerns. Thus, firm’s social responsibility restores also in network industries the conventional result of the trade-union economics that the firm prefers right-to-manage (RTM). However, this may result rather paradoxical because RTM is always welfare-inferior and thus the higher the social responsibility is, the lower the social welfare outcome due to the agenda selection. As a consequence an increase of the firms’ social concerns in network industries may reduce, through the channel of the unionised labour market, social welfare, in contrast with the common sense. This sheds some light on so far unexplored effects of the promotion of social responsibility activities by policy makers when also labour markets are taken into account.

Keywords: Efficient bargaining; Right-to-manage; Firm-union bargaining agenda; Corporate social responsibility; Network effects (search for similar items in EconPapers)
JEL-codes: J51 L12 L21 M14 (search for similar items in EconPapers)
Date: 2017
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Handle: RePEc:spr:epolit:v:34:y:2017:i:3:d:10.1007_s40888-016-0051-1