Green Trade Union and Welfare

In this paper we investigate whether and how the presence of a union interested in "local" environmental damages (e.g. polluting production processes damaging workers' health and the local environment where workers live) affects the welfare of single agents — firms, consumers and workers — and society as a whole. Under monopoly it is shown that if the market is sufficiently large (but not too large) the presence of unions with sufficiently strong (but no too strong) environmental concerns may benefit workers and consumers and, while reducing profits, the society as a whole. Interestingly, in such a case greener unions may also increase employment, in contrast to the popular view that a trade-off between employment and environmental regulations always exists. Moreover, we show that the union's environmental concerns may (1) incentivize or discourage the investments in cleaner technology (i.e. the level of the unitary pollution abatement) depending on the market size, and (2) rather counter-intuitively, even increase the total environmental damage when the market size is neither too small nor too large. These findings offer non-trivial policy implications.