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Unionization structure, licensing and innovation


  • Mukherjee, Arijit
  • Pennings, Enrico


We show the effects of the unionization structure (viz., decentralized and centralized unions) on a firm's incentive for technology licensing and innovation. The incentive for technology licensing is stronger under decentralized unions. We identify circumstances under which the benefit from licensing creates a stronger incentive for innovation under decentralized unions. If the union's preference for employment is high, the benefit from licensing may create higher incentive for innovation under decentralized unions. However, if the union's preference for wage is high enough, the incentive for innovation is higher under a centralized union irrespective of licensing ex-post innovation. If the centralized union decides whether or not to supply workers to all firms, the possibility of higher innovation under decentralized unions increases. We further show that perfectly substitutable workers can be better off under decentralized unions if the labor productivity depends on the unionization structure, which occurs in our analysis when, e.g., licensing after innovation occurs only under decentralized unions or innovation (with no licensing) occurs only under a centralized union.

Suggested Citation

  • Mukherjee, Arijit & Pennings, Enrico, 2011. "Unionization structure, licensing and innovation," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 232-241, March.
  • Handle: RePEc:eee:indorg:v:29:y:2011:i:2:p:232-241

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    References listed on IDEAS

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    Cited by:

    1. Takauchi, Kazuhiro, 2015. "Endogenous transport price and international R&D rivalry," Economic Modelling, Elsevier, vol. 46(C), pages 36-43.
    2. Matsushima, Noriaki & Mizuno, Tomomichi, 2012. "Profit-enhancing competitive pressure in vertically related industries," Journal of the Japanese and International Economies, Elsevier, vol. 26(1), pages 142-152.
    3. Luciano Fanti & Nicola Meccheri, 2014. "Capacity choice and welfare under alternative unionisation structures," Discussion Papers 2014/176, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    4. Neelanjan Sen, 2015. "Technology transfer and its effect on innovation," Economics Bulletin, AccessEcon, vol. 35(4), pages 2523-2534.
    5. Luciano Fanti & Nicola Meccheri, 2013. "Managerial Delegation under Alternative Unionization Structures," LABOUR, CEIS, vol. 27(1), pages 38-57, March.
    6. Luca Lambertini & Luigi Marattin, 2016. "To adjust or not to adjust after a cost-push shock? A simple duopoly model with (and without) resilience," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(2), pages 172-181, March.
    7. Siddhartha Bandyopadhyay & Arijit Mukherjee, 2014. "R&D Cooperation with Entry," Manchester School, University of Manchester, vol. 82(1), pages 52-70, January.
    8. repec:bla:manchs:v:85:y:2017:i:6:p:661-681 is not listed on IDEAS
    9. Maiti, Dibyendu & Mukherjee, Arijit, 2013. "Trade cost reduction, subcontracting and unionised wage," Labour Economics, Elsevier, vol. 21(C), pages 103-110.
    10. Debasmita Basak & Andreas Hoefele & Arijit Mukherjee, 2014. "Union Bargaining Power and Product Innovation: Relevance of the Preference Function," CESifo Working Paper Series 5007, CESifo Group Munich.
    11. Arijit Mukherjee & Kullapat Suetrong, "undated". "Unionisation structure and strategic foreign direct investment," Discussion Papers 07/22, University of Nottingham, GEP.
    12. Beatrice Pagel & Christian Wey, 2013. "Unionization Structures in International Oligopoly," LABOUR, CEIS, vol. 27(1), pages 1-17, March.
    13. Shohei Yoshida, 2015. "Multiproduct competition in vertically related industries," ISER Discussion Paper 0935, Institute of Social and Economic Research, Osaka University.
    14. Luciano Fanti & Nicola Meccheri, 2012. "Profits and Competition in a Unionized Duopoly Model with Product Differentiation and Labour Decreasing Returns," Working Paper series 06_12, Rimini Centre for Economic Analysis.
    15. Debasmita Basask, "undated". "Price competition and the effects of labour union on process innovation," Discussion Papers 12/05, University of Nottingham, School of Economics.
    16. Debasmita Basak & Arijit Mukherjee, "undated". "Unionisation structure and product innovation," Discussion Papers 11/12, University of Nottingham, School of Economics.
    17. Arijit Mukherjee & Achintya Ray, 2014. "Entry, Profit and Welfare under Asymmetric R&D Costs," Manchester School, University of Manchester, vol. 82(3), pages 284-295, June.

    More about this item


    Centralized union Decentralized union Innovation Licensing Union utility;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital


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