Entry and Unemployment in a Union-Oligopoly Model

Laurence Lasselle and Serge Svizzero

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: It is commonly acknowledged that a larger number of trade unions is associated with a higher level of employment. We demonstrate that this belief can be wrong, i.e. that the entry of trade unions can increase the number of unemployed workers. This result is stated in a multi-sector economy in which Cournotian trade unions incur no cost and have a nominal objective function. It is obtained when the labour demand function is sufficiently convex such that the trade unions' actions become strong strategic complements. In addition, we show that this counterintuitive result is consistent with a wide range of parameter values under a CES technology.

JEL-codes: D43 E24 (search for similar items in EconPapers)
Date: 1999-10
New Economics Papers: this item is included in nep-lab
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Working Paper: Entry and Unemployment in a Union-Oligopoly Model (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9904

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