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Unionisation Structures and Heterogeneous Firms

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  • Sebastian Braun

Abstract

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

Suggested Citation

  • Sebastian Braun, 2009. "Unionisation Structures and Heterogeneous Firms," Kiel Working Papers 1566, Kiel Institute for the World Economy.
  • Handle: RePEc:kie:kieliw:1566
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    More about this item

    Keywords

    Trade unions; heterogeneous firms; productivity; firm performance;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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