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Open‐shop unions and product market competition

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  • Paulo Bastos
  • Udo Kreickemeier
  • Peter W. Wright

Abstract

Evidence on the effect of product market competition on unionized wages is mixed. In this paper we show theoretically that the result may reflect genuine heterogeneity in the response of union wages to product market conditions. For low levels of unionization, union bargaining power may actually be enhanced by market competition, as firms have more to lose when there is a strike. Using recent data from the UK, we explore interactions between the level of industry competition and unionization, and find supporting evidence for this hypothesis. Les résultats de la concurrence sur le marché du produit sur les salaires des syndiqués ne sont pas concluants. Dans ce mémoire, on montre théoriquement que cet état de fait peut refléter une véritable hétérogénéité dans la réponse des salaires des syndiqués aux conditions dans le marché du produit. Pour de faibles niveaux de syndicalisation, le pouvoir de marchandage du syndicat peut être exhaussé par la concurrence sur le marché du produit puisque les firmes ont davantage à perdre s'il y a grève. A l'aide de données récentes pour le Royaume Uni, on explore les interactions entre le niveau de concurrence et de syndicalisation dans l'industrie, et les résultats supportent cette hypothèse.

Suggested Citation

  • Paulo Bastos & Udo Kreickemeier & Peter W. Wright, 2010. "Open‐shop unions and product market competition," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(2), pages 640-662, May.
    • Handle: RePEc:wly:canjec:v:43:y:2010:i:2:p:640-662
    DOI: 10.1111/j.1540-5982.2010.01587.x
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    Cited by:

    1. Nicola Meccheri & Luciano Fanti, 2014. "Informal incentive labour contracts and product market competition," Journal of Economics, Springer, vol. 111(2), pages 131-149, March.
    2. Arijit Mukherjee, 2011. "Product market competition, external economies of scale and unionized wage," Discussion Papers 11/14, University of Nottingham, School of Economics.
    3. Ahsan, Reshad N. & Mitra, Devashish, 2014. "Trade liberalization and labor's slice of the pie: Evidence from Indian firms," Journal of Development Economics, Elsevier, vol. 108(C), pages 1-16.
    4. Debasmita Basak & Arijit Mukherjee, 2021. "Competition, External Economies of Scale, and Unionized Wage," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 585-592, December.
    5. Arijit Mukherjee, 2012. "Product market competition, open shop union and wage," Journal of Economics, Springer, vol. 107(2), pages 183-190, October.
    6. Fanti, Luciano & Meccheri, Nicola, 2014. "Profits and competition under alternative technologies in a unionized duopoly with product differentiation," Research in Economics, Elsevier, vol. 68(2), pages 157-168.

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    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
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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