The impact of monopolistic wage setting on innovation and market structure

Siegfried K. Berninghaus ()
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Siegfried K. Berninghaus: Universität Karlsruhe, Postal: RZ Zirkel 2 D-76128 Karlsruhe

No 00-37, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: We model a simple patent race between symmetric firms, where all firms are involved in a wage bargaining process with the same trade union. We analyze how R&D expenditures and the outcome of the patent race are affected by a trade union’s wage policy. As a main result, we are able to show that a trade union’s wage policy may transform the oligopolistic market structure on a commodity market into a monopoly, provided, the innovation is sufficiently drastic. We know of no comparable findings in the corresponding literature.

Pages: 25 pages
Date: 2000-05-20
Note: Financial support from the Deutsche Forschungsgemeinschaft, SFB 504, at the University of Mannheim, is gratefully acknowledged.
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