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A Note on Unionized Firms' Incentive to Integrate Vertically

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  • Thomas Grandner

    (Department of Economics, Vienna University of Economics & B.A.)

Abstract

In this paper I analyze a vertically structured monopolized market with unionized firms. I compare two types of contracts: vertical integration and franchising. With franchising and wage bargaining at the firm level the union in the downstream firm is either very powerful or has no bargaining power at all, depending on the specific time structure of the model. These arguments could make integration preferable for the profit owners even if integration is accompanied by small transaction costs.

Suggested Citation

  • Thomas Grandner, 2000. "A Note on Unionized Firms' Incentive to Integrate Vertically," Department of Economics Working Papers wuwp070, Vienna University of Economics and Business, Department of Economics.
    • Handle: RePEc:wiw:wiwwuw:wuwp070
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    References listed on IDEAS

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    13. Silvia Rocha-Akis, 2006. "Labour tax policies and strategic offshoring under unionised oligopoly," Department of Economics Working Papers wuwp099, Vienna University of Economics and Business, Department of Economics.
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    More about this item

    Keywords

    Vertical Integration; Trade Unions;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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