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Labour unions and multi‐product firms in closed and open economies

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  • Hartmut Egger
  • Michael Koch

Abstract

This paper sets up a general oligopolistic equilibrium model with multi‐product firms and union wage setting. In this model, we conduct two policy experiments. First, we show that deunionization induces a general decline in firm scale and scope, the respective reduction being more pronounced in non‐unionized industries. Second, we study the consequences of trade liberalization, and show that access to foreign markets lowers firm scope in all industries as well as the scope differential between unionized and non‐unionized firms. Adjustments in firm scale turn out to be less clear‐cut and, inter alia, depend on the degree of product differentiation. Ce texte construit un modèle général d’équilibre oligopolistique avec des firmes multi‐produits et une détermination des salaires par le syndicat. Dans ce modèle, on mène deux expériences. D’abord, on montre que la désyndicalisation engendre un déclin général dans l’échelle et la portée des firmes, avec une réduction plus prononcée dans les industries non‐syndiquées. Ensuite, on étudie les conséquences de la libéralisation du commerce et on montre que l’accès aux marchés étrangers réduit la portée de firmes dans toutes les industries ainsi que le différentiel de portée entre les firmes syndiquées et non‐syndiquées. Les ajustements dans l’échelle des firmes sont moins clairement définis et inter alia dépendent du degré de différenciation des produits.

Suggested Citation

  • Hartmut Egger & Michael Koch, 2012. "Labour unions and multi‐product firms in closed and open economies," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(4), pages 1456-1479, November.
  • Handle: RePEc:wly:canjec:v:45:y:2012:i:4:p:1456-1479
    DOI: 10.1111/j.1540-5982.2012.01745.x
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    Cited by:

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    2. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    3. Hosaki Sano, 2018. "Labor union and firm fs relocation: A general oligopolistic equilibrium model analysis," Discussion Papers in Economics and Business 18-15-Rev., Osaka University, Graduate School of Economics, revised May 2018.
    4. Wrona, Jens & Kreickemeier, Udo, 2016. "Industrialisation and the Big Push in a Global Economy," VfS Annual Conference 2016 (Augsburg): Demographic Change 145707, Verein für Socialpolitik / German Economic Association.
    5. Michael Irlacher, 2022. "Multi-product Firms in International Economics," Economics working papers 2022-01, Department of Economics, Johannes Kepler University Linz, Austria.
    6. Luca Macedoni & Rui Zhang & Frederic Warzynski, 2024. "Fight or Flight? How Do Firms Adapt Their Product Mix in Response to Demand and Competition," CESifo Working Paper Series 11144, CESifo.
    7. Irlacher, Michael & Baumgarten, Daniel & Koch, Michael, 2017. "Short- versus long-run effects of offshoring when sectors are heterogeneous," VfS Annual Conference 2017 (Vienna): Alternative Structures for Money and Banking 168272, Verein für Socialpolitik / German Economic Association.

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    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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