Union bargaining power, subcontracting and innovation

Beladi, Hamid; Mukherjee, Arijit

Abstract

We show that if a firm can subcontract production to an informal sector, an increase in union power may either increase or decrease innovation. An increase in union power makes the firm worse off irrespective of its effect on innovation. However, in contrast to the usual belief, an increase in union power may increase consumer surplus and decrease union utility by affecting innovation, thus suggesting that a union may not want to be too powerful. An increase in union power may create an ambiguous effect on social welfare. Our analysis provides new insights to the relation between union power and innovation.

Citation

Beladi, H., & Mukherjee, A. (2017). Union bargaining power, subcontracting and innovation. Journal of Economic Behavior and Organization, 137, 90-104. https://doi.org/10.1016/j.jebo.2017.02.013

• Journal Article Type: Article
• Acceptance Date: Feb 17, 2017
• Online Publication Date: Feb 21, 2017
• Publication Date: 2017-05
• Deposit Date: Feb 22, 2017
• Publicly Available Date: Aug 22, 2018
• Journal: Journal of Economic Behavior & Organization
• Print ISSN: 0167-2681
• Electronic ISSN: 0167-2681
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 137
• Pages: 90-104
• DOI: https://doi.org/10.1016/j.jebo.2017.02.013
• Keywords: Consumer surplus; Innovation; Union; Subcontracting
• Public URL: https://nottingham-repository.worktribe.com/output/844877
• Publisher URL: http://www.sciencedirect.com/science/article/pii/S016726811730046X