In this paper we consider the effect of union structure on the adoption of innovation in the context of Cournot duopoly. With a market size large enough we show that the incentive to innovate is higher under a decentralized union structure (with each firm facing its own independent union) than under an industry-wide union. However, for a small market size (or, equivalently, for sufficiently drastic potential innovation) the new technology is more likely to be adopted in the presence of a centralized union. This result goes against the conventional view that unionization harms the incentive to innovate.
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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number
2000-21.
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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