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Union bargaining power, subcontracting and innovation

Beladi, Hamid; Mukherjee, Arijit

Authors

Hamid Beladi

Arijit Mukherjee



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.

Journal Article Type Article
Journal Journal of Economic Behavior and Organization
Print ISSN 0167-2681
Electronic ISSN 0167-2681
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 137
APA6 Citation Beladi, H., & Mukherjee, A. (in press). Union bargaining power, subcontracting and innovation. Journal of Economic Behavior and Organization, 137, doi:10.1016/j.jebo.2017.02.013
DOI https://doi.org/10.1016/j.jebo.2017.02.013
Keywords Consumer surplus; Innovation; Union; Subcontracting
Publisher URL http://www.sciencedirect.com/science/article/pii/S016726811730046X
Copyright Statement Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0

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Copyright Statement
Copyright information regarding this work can be found at the following address: http://creativecommons.org/licenses/by-nc-nd/4.0





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