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Unionisation Structures and Heterogeneous Firms

  • Sebastian Braun

The effects of unions on productivity and firm performance have been the topic of extensive research. Existing studies have, however, primarily focused on firm-level bargaining and on markets that are characterised by a small and fixed number of identical firms. This paper studies how different unionisation structures affect firm productivity and firm performance in a monopolistic competition model with heterogeneous firms and free entry. While centralised bargaining induces tougher selection among heterogeneous producers and thus increases average productivity, firm-level bargaining allows less productive entrants to remain in the market. Centralised bargaining also results in higher average output and profit levels than either decentralised bargaining or a competitive labour market. From the perspective of consumers, the choice between centralised and decentralised bargaining involves a potential trade-off between product variety and product prices

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File URL: https://www.ifw-members.ifw-kiel.de/publications/unionisation-structures-and-heterogeneous-firms/kwp-1566.pdf
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Paper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1566.

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Length: 17 pages
Date of creation: Oct 2009
Date of revision:
Handle: RePEc:kie:kieliw:1566
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