A note on unionized firms' incentive to integrate vertically

Publication: Working/Discussion PaperWU Working Paper

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Abstract

In this paper I analyze a vertically structured monopolized market with unionized firms. I compare two types of contracts: vertical integration and franchising. With franchising and wage bargaining at the firm level the union in the downstream firm is either very powerful or has no bargaining power at all, depending on the specific time structure of the model. These arguments could make integration preferable for the profit owners even if integration is accompanied by small transaction costs. (author's abstract)

Publication series

SeriesDepartment of Economics Working Paper Series
Number70

WU Working Paper Series

  • Department of Economics Working Paper Series

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