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Department of Economics, WU (Wirtschaftsuniversität Wien) Working papers, Department of Economics, WU (Wirtschaftsuniversität Wien)

No 70:
A Note on Unionized Firms' Incentive to Integrate Vertically

Thomas Grandner ()

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; (follow links to similar papers)

JEL-Codes: L22; J51; (follow links to similar papers)

May 2000

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