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Timing of Wage Setting When Firms Invest in R&D

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Author Info
Juan Carlos Barcena () (UPV/EHU)
María Luz Campo () (UPV/EHU)

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Abstract

In this paper, we analyze the effect that the timing of wage setting (i.e. whether wages are set sequentially or simultaneously) has on the investment in R&D of firms, when that investment increases the productivity of labor, in the context of a Cournot duopoly. Contrary to the result obyained if the size of the market is small enough and the efficiency of the R&D technology is great enough. It is in this case that firms spend most on R&D. By contrast, when unions choose to set wages seguentially, spending by firms on R&D is at lowest.

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Paper provided by Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I in its series IKERLANAK with number 200308.

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Date of creation: 15 Jan 2004
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Handle: RePEc:ehu:ikerla:200308

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Postal: Dpto. de Fundamentos del Análisis Económico I, Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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Related research
Keywords: Unions; R&D; productivity of labor; wage setting;

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Find related papers by JEL classification:
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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