DP1527 To be (Unionized) or Not to be? A Case for Cost-raising Strategies

Author(s): Jacques R.J. Bughin, Stefano Vannini
Publication Date: December 1996
Keyword(s): Cost-raising Strategies, Union-Firm Bargaining
JEL(s): J51, L20
Programme Areas: Industrial Organization
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1527

This paper analyses the decision by a firm over whether or not to recognize unions (and therefore enter the bargaining process) in order to gain market power in unionized markets. We show that union power coupled with the nature of the union-firm bargaining process - i.e. scope and structure - are key determinants of a firm?s choice to be unionized and to strategically adopt cost-raising strategies.