Skip to main content
SpringerLink
Log in

Unionized oligopoly and vertical integration

  • Published:
International Review of Economics Aims and scope Submit manuscript

Abstract

Labor market structures may have important effects on imperfectly competitive rivalries between firms. This paper examines the consequences of unionization for the rivalry between duopoly firms in two types of contracts: vertical integration and vertical separation. If a franchise fee is used to extract the retailer’s profit, then it is in the individual interest of each manufacturer to choose vertical separation and charge his retailer a wholesale price in excess of the unit production cost, depending on the specific time structures. These arguments could make integration preferable for the manufacturer if the wage bargaining power of the union is relatively powerful.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

References

  • Bonanno G. andVickers J., “Vertical Separation”,Journal of Industrial Economics, 1988,36, pp. 257–65.

    Article  Google Scholar 

  • Booth A.L.,The Economics of the Trade Union, Cambridge: Cambridge University Press, 1995.

    Google Scholar 

  • Farber H., “The Analysis of Union Behavior”, in O. Ashenfelter and R. Layard, eds.,Handbook of Labor Economics, Vol. II, Amsterdam: North-Holland, 1986, pp. 1039–89.

    Google Scholar 

  • Fumagalli C. andMotta M., “Upstream Mergers, Downstream Mergers, and Secret Vertical Contracts”,Research in Economics, 2001,55, pp. 275–89.

    Article  Google Scholar 

  • Grandner T. (2000a), “Is Wage-Leadership an Instrument to Coordinate Unions’ Wage-Policy?”,LABOUR: Review of Labour Economics and Industrial Relations, 2000,14, pp. 245–68.

    Google Scholar 

  • ---(2000b), “A Note on Unionized Firms’ Incentive to Integrate Vertically”, Working Paper No. 70, Vienna University of Economics and Business Administration, 2000.

  • Hart O. and Tirole J., “Vertical Integration and Market Foreclosure”,Brookings Papers on Economic Activity, 1990, pp. 205–76.

  • Oswald A., “The Economic Theory of Trade Unions: An Introductory Survey”,Scandinavian Journal of Economics, 1985,87, pp. 160–93.

    Article  Google Scholar 

  • Tirole J.,The Theory of Industrial Organization, Cambridge, Mass.: MIT Press, 1988.

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Graduate Institute of Industrial Economics, National Central University, Jhongly City, Taiwan

    Shu-hua Chang

  2. Department of Accounting, National Taichung Institute of Technology, Taichung, Taiwan

    Shu-hua Chang

Authors
  1. Shu-hua Chang
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Shu-hua Chang.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Chang, Sh. Unionized oligopoly and vertical integration. RISEC 53, 1–15 (2006). https://doi.org/10.1007/BF03029847

Download citation

  • Issue Date:

  • DOI: https://doi.org/10.1007/BF03029847

JEL classification

Keywords

Search

Navigation