When unionisation is profitable for firms in network industries

Luciano Fanti and Domenico Buccella

No 2017-9, Economics Discussion Papers from Kiel Institute for the World Economy

Abstract: In an industry characterised by the presence of network effects, this paper investigates a duopolistic game in which firms may choose whether to bargain over wages and employment with unions or to face a competitive labour market (i.e. without unions). If unions are sufficiently risk-averse, it is shown that the presence of strong network effects makes unionisation the Pareto-efficient sub-game perfect Nash equilibrium outcome for firms. The issue of entry is also investigated.

Keywords: unionised oligopoly; competitive labour market; efficient bargaining; market entry and entry deterrence (search for similar items in EconPapers)
JEL-codes: J51 L13 L20 (search for similar items in EconPapers)
Date: 2017
New Economics Papers: this item is included in nep-com
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https://www.econstor.eu/bitstream/10419/155765/1/881956554.pdf (application/pdf)

Related works:
Journal Article: When unionisation is profitable for firms in network industries (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:20179

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