UNION STRUCTURE AND THE INCENTIVES FOR INNOVATION IN OLIGOPOLY

Miguel González-Maestre and Vicente Calabuig

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: In this paper we consider the effect of union structure on the adoption of innovation in the context of Cournot duopoly. With a market size large enough we show that the incentive to innovate is higher under a decentralized union structure (with each firm facing its own independent union) than under an industry-wide union. However, for a small market size (or, equivalently, for sufficiently drastic potential innovation) the new technology is more likely to be adopted in the presence of a centralized union. This result goes against the conventional view that unionization harms the incentive to innovate.

Keywords: Oligopoly; Unions; Innovation. (search for similar items in EconPapers)
JEL-codes: J51 L13 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2000-10
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2000-21

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