Open Shop Unions and Product Market Competition

Bastos, Paulo; Kreickemeier, Udo; Wright, Peter W

doi:10.2139/ssrn.905243

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Open Shop Unions and Product Market Competition

University of Nottingham Research Paper No. 2006/15

28 Pages Posted: 31 May 2006

See all articles by Paulo Bastos

Paulo Bastos

World Bank; Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Udo Kreickemeier

University of Tuebingen; CESifo (Center for Economic Studies and Ifo Institute); University of Goettingen (Göttingen) - Faculty of Economics and Business Administration

Peter W Wright

University of Sheffield - Department of Economics

Date Written: May 2006

Abstract

In this paper we analyse the impact of changes in product market competition on wage outcomes in the presence of an open shop union. With less than full union membership, product market competition is shown to affect not only a unionised firm's profits but also its payoff in the event of a dispute. In contrast to the prediction of the standard model, increases in product market competition may now increase wage levels. The model is therefore able to accommodate the mixed empirical findings regarding the impact of product market competition on union wages.

Keywords: Bargaining, open shop trade unions, product market competition

JEL Classification: J51, J52, L13

Suggested Citation: Suggested Citation

Bastos, Paulo and Kreickemeier, Udo and Wright, Peter W, Open Shop Unions and Product Market Competition (May 2006). University of Nottingham Research Paper No. 2006/15, Available at SSRN: https://ssrn.com/abstract=905243 or http://dx.doi.org/10.2139/ssrn.905243