Economics 11/14: Product market competition, external economies of scale and unionized wage

Abstract

Although empirical evidence shows that higher product market competition increases unionized wage, the theoretical literature did not pay much attention to this aspect. We show that the positive relation between product market competition and unionized wage may occur in the presence of external economies of scale. In this respect, the labor productivity and the effects of the external economies of scale may play important roles.

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Authors

Arijit Mukherjee

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