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Unionization structure, licensing and innovation

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  • Mukherjee, Arijit
  • Pennings, Enrico

Abstract

We show the effects of the unionization structure (viz., decentralized and centralized unions) on a firm's incentive for technology licensing and innovation. The incentive for technology licensing is stronger under decentralized unions. We identify circumstances under which the benefit from licensing creates a stronger incentive for innovation under decentralized unions. If the union's preference for employment is high, the benefit from licensing may create higher incentive for innovation under decentralized unions. However, if the union's preference for wage is high enough, the incentive for innovation is higher under a centralized union irrespective of licensing ex-post innovation. If the centralized union decides whether or not to supply workers to all firms, the possibility of higher innovation under decentralized unions increases. We further show that perfectly substitutable workers can be better off under decentralized unions if the labor productivity depends on the unionization structure, which occurs in our analysis when, e.g., licensing after innovation occurs only under decentralized unions or innovation (with no licensing) occurs only under a centralized union.

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Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 2 (March)
Pages: 232-241

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Handle: RePEc:eee:indorg:v:29:y:2011:i:2:p:232-241

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Web page: http://www.elsevier.com/locate/inca/505551

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Keywords: Centralized union Decentralized union Innovation Licensing Union utility;

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References

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Citations

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Cited by:
  1. Luciano Fanti & Nicola Meccheri, 2012. "Managerial Delegation under Alternative Unionization Structures," Working Paper Series 07_12, The Rimini Centre for Economic Analysis.
  2. Luciano Fanti & Nicola Meccheri, 2014. "Capacity Choice and Welfare under Alternative Unionisation Structures," Working Paper Series 12_14, The Rimini Centre for Economic Analysis.
  3. Matsushima, Noriaki & Mizuno, Tomomichi, 2012. "Profit-enhancing competitive pressure in vertically related industries," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 142-152.
  4. Sen, Neelanjan, 2014. "Technology Transfer and its effect on Innovation," MPRA Paper 55542, University Library of Munich, Germany.
  5. Luciano Fanti & Nicola Meccheri, 2012. "Profits and Competition in a Unionized Duopoly Model with Product Differentiation and Labour Decreasing Returns," Working Paper Series 06_12, The Rimini Centre for Economic Analysis.
  6. Pagel, Beatrice & Wey, Christian, 2012. "Unionization structures in international oligopoly," DICE Discussion Papers 44, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  7. Maiti, Dibyendu & Mukherjee, Arijit, 2013. "Trade cost reduction, subcontracting and unionised wage," Labour Economics, Elsevier, vol. 21(C), pages 103-110.
  8. Debasmita Basask, . "Price competition and the effects of labour union on process innovation," Discussion Papers 12/05, University of Nottingham, School of Economics.
  9. Debasmita Basak & Arijit Mukherjee, . "Unionisation structure and product innovation," Discussion Papers 11/12, University of Nottingham, School of Economics.

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