Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/25343
Authors: 
Braun, Sebastian
Year of Publication: 
2009
Series/Report no.: 
SFB 649 discussion paper 2009,027
Abstract: 
This paper studies how different unionisation structures affect firm productivity, firm performance, and consumer welfare in a monopolistic competition model with heterogeneous firms and free entry. While centralised bargaining induces tougher selection among hetero- geneous producers and thus increases average productivity, firm-level bargaining allows less productive entrants to remain in the market. Centralised bargaining also results in higher average output and profit levels than either decentralised bargaining or a competitive labour market. From a welfare perspective, the choice between centralised and decentralised bar- gaining involves a potential trade-off between product variety and product prices. Extending the model to a two-country setup, I furthermore show that the positive effect of centralised bargaining on average productivity can be overturned when firms face international low-wage competition.
Subjects: 
Trade Unions
Productivity
Firm Performance
International Competition
JEL: 
J50
D43
F16
Document Type: 
Working Paper

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