Union Wage Bargaining and the Incentive to Innovate
AbstractWe analyse the influence of wage bargaining on the firm´s research incentive. In a duopoly setting, firms invest resources into a Reinganum-type patent race. The wage is bargained for with a union. Besides the holdup and the strategic effect, which have been analysed before, we are able to identify a third effect of unionisation: through the Arrow effect. This effect increases the incentive for doing research. Solving the model numerically reveals that in sum, unionisation decreases the level of research investment. This result is independent of the bargaining institution and of the degree of product heterogeneity.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 165 (2009)
Issue (Month): 2 (June)
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Web page: http://www.mohr.de/jite
Postal: Mohr Siebeck GmbH & Co. KG, P.O.Box 2040, 72010 Tübingen, Germany
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
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- Lai, Chung-Hui & Wang, Vey, 2010. "The effects of unionization in an R&D growth model with (In)determinate equilibrium," MPRA Paper 27748, University Library of Munich, Germany.
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