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

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  • Constantine Manasakis
  • Emmanuel Petrakis

Abstract

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.

Suggested Citation

  • Constantine Manasakis & Emmanuel Petrakis, 2009. "Union structure and firms' incentives for cooperative R&D investments," Canadian Journal of Economics, Canadian Economics Association, vol. 42(2), pages 665-693, May.
  • Handle: RePEc:cje:issued:v:42:y:2009:i:2:p:665-693
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Minas Vlassis & Maria Varvataki, 2014. "Union-Oligopoly Bargaining and Vertical Differentiation: Do Unions Affect Quality? Dynamic Analysis," Working Papers 1410, University of Crete, Department of Economics.
    2. Luciano Fanti & Nicola Meccheri, 2014. "Capacity Choice and Welfare under Alternative Unionisation Structures," Working Paper series 12_14, Rimini Centre for Economic Analysis.
    3. Takauchi, Kazuhiro, 2015. "Endogenous transport price and international R&D rivalry," Economic Modelling, Elsevier, vol. 46(C), pages 36-43.
    4. Ben Ferrett & Vasileios Zikos, 2013. "Wage-Setting Institutions and R&D Collaboration Networks," Australian Economic Papers, Wiley Blackwell, vol. 52(2), pages 61-78, June.
    5. Minas Vlassis & Maria Varvataki, 2014. "Union-Oligopoly Bargaining and Vertical Differentiation: Do Unions Affect Quality?," Working Papers 1409, University of Crete, Department of Economics.
    6. Asproudis, Elias, 2011. "Trade union structure with environmental concern and firms' technological choice," MPRA Paper 28767, University Library of Munich, Germany.
    7. Luis M. Granero, 2006. "Codetermination, R&D, and Employment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(2), pages 309-328, June.
    8. Falvey, Rod & Poyago-Theotoky, Joanna & Teerasuwannajak, Khemarat Talerngsri, 2013. "Coordination costs and research joint ventures," Economic Modelling, Elsevier, vol. 33(C), pages 965-976.
    9. Mukherjee, Arijit, 2013. "Endogenous domestic market structure and the effects of a trade cost reduction in a unionised industry," Economic Modelling, Elsevier, vol. 32(C), pages 30-33.

    More about this item

    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
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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