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Union structure and firms' incentives for cooperative R&D investments

  • Constantine Manasakis
  • Emmanuel Petrakis

We investigate the impact of alternative unionization structures on firms' incentives to invest on cost-reducing R&D and to form Research Joint Ventures (RJVs), in the presence of R&D spillovers. We show that if firms invest non-cooperatively and spillovers are low, R&D investments are higher under centralized rather than under decentralized wage-setting. In contrast, investments are always higher under decentralized wage-setting in the case of RJVs. Firms' incentives to form an RJV are stronger under centralized wage-setting if and only if spillovers are low enough. Finally, centralized wage-setting may hinder the formation of costly RJVs and their potential welfare benefits.

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Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 42 (2009)
Issue (Month): 2 (May)
Pages: 665-693

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Handle: RePEc:cje:issued:v:42:y:2009:i:2:p:665-693
Contact details of provider: Postal: Canadian Economics Association Prof. Steven Ambler, Secretary-Treasurer c/o Olivier Lebert, CEA/CJE/CPP Office C.P. 35006, 1221 Fleury Est Montréal, Québec, Canada H2C 3K4
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