A Note on Unionized Firms' Incentive to Integrate Vertically

Thomas Grandner ()
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Thomas Grandner: Department of Economics, Vienna University of Economics & B.A.

Department of Economics Working Papers from Vienna University of Economics and Business, Department of Economics

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.

Keywords: Vertical Integration; Trade Unions (search for similar items in EconPapers)
JEL-codes: J51 L22 (search for similar items in EconPapers)
Date: 2000-05
New Economics Papers: this item is included in nep-ind and nep-lab
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