European Business Schools Librarian's Group

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

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.

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

JEL-codes: L22; J51 May 2000

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