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When unionisation is profitable for firms in network industries

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  • Luciano Fanti
  • Domenico Buccella

Abstract

In an industry characterised by the presence of network effects, this paper investigates a duopolistic game in which firms may choose whether to bargain over wages and employment with unions or to face a competitive labour market (i.e., without unions). If unions are sufficiently wage‐sensitive, it is shown that the presence of sufficiently large network effects makes unionisation the Pareto efficient sub‐game perfect Nash equilibrium outcome for firms.

Suggested Citation

  • Luciano Fanti & Domenico Buccella, 2019. "When unionisation is profitable for firms in network industries," Metroeconomica, Wiley Blackwell, vol. 70(4), pages 711-722, November.
    • Handle: RePEc:bla:metroe:v:70:y:2019:i:4:p:711-722
    DOI: 10.1111/meca.12249
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    References listed on IDEAS

    as
    1. Luciano Fanti, 2014. "When do firms and unions agree on a monopoly union or an efficient bargaining arrangement?," Discussion Papers 2014/181, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
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    7. Luciano Fanti & Domenico Buccella, 2016. "Bargaining Agenda and Entry in a Unionised Model with Network Effects," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(1), pages 91-121, March.
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    Full references (including those not matched with items on IDEAS)

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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
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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