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:	Publisher

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