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    Strategic investment and international outsourcing in unionised oligopoly


    Leahy, Dermot and Montagna, Catia (2012) Strategic investment and international outsourcing in unionised oligopoly. Labour Economics, 19 (2). pp. 260-269. ISSN 0927-5371

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    Abstract

    We develop an oligopoly model in which fi rms facing unionised domestic labour markets choose between producing an intermediate good in-house and outsourcing it to a non-unionised foreign supplier that makes a relationship-speci fi c investment in developing the intermediate. The paper sheds light on the issue of whether international outsourcing offers a means to ‘ escape ’ the power of domestic unions and on the existence of intra-industry wage dispersion. We show that outsourcing typically increases marginal costs even when it lowers union wages. Despite this, more powerful unions increase the incentive to outsource.

    Item Type: Article
    Keywords: Outsourcing; Unionisation; Wage dispersion; Strategic investment; Oligopol;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 5724
    Identification Number: https://doi.org/10.1016/j.labeco.2011.11.003
    Depositing User: Dermot Leahy
    Date Deposited: 23 Jan 2015 11:46
    Journal or Publication Title: Labour Economics
    Publisher: Elsevier
    Refereed: Yes
    URI:

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