The Incentives to Make Commitments in Wage Bargains
It is commonly believed that a workforce of identical workers will be better-off organized in a single union rather than separate unions that bargain independently with an employer, for this will prevent the employer playing off one union against another. In this paper, the author shows that there are circumstances where this need not be the case. If it is impossible for the firm and workers to sign long-term binding contracts on wages and employment, then the firm will wish to invest in a capital stock below the efficient level; by organizing in separate unions, the firm will be induced to raise its level of investment to ensure it has enough capacity with each union to make a threat to switch production to another union credible. The effect on workers' payoffs from a higher capital stock can outweigh the loss of bargaining power as a result of the workforce being in separate unions. There will also be circumstances where the firm will invest in a capital stock that exceeds the efficient level. Copyright 1989 by The Review of Economic Studies Limited.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 56 (1989)
Issue (Month): 3 (July)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0034-6527|
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0034-6527|
When requesting a correction, please mention this item's handle: RePEc:bla:restud:v:56:y:1989:i:3:p:449-65. See general information about how to correct material in RePEc.
If references are entirely missing, you can add them using this form.