Union duopoly with homogeneous labor: The effect of membership and employment constraints



Abstract. This research analyzes the labor market outcome when there are two unions in the industry, representing homogeneous workers (hence, unions use employment strategies), in the presence of union employment (quantity) constraints. Three strategic environments are considered: Nash-Cournot duopoly, Stackelberg duopoly and efficient cooperation between the two unions. Employment constraints -ceilings and floors- originate kinks and/or discontinuities in the reaction functions, leading to corner solutions and special features of the labor market equilibrium. Two types of constraints are discussed. One is insufficient employed membership (ceiling) for the interior solution. Then it may be optimal for a Stackelberg leader to push the other to the bound. The other case considered is the legal requirement of a minimum number of employed members that the union must have to be constituted. Entry-deterrence strategies of the leading union may then emerge.

Keywords. Unions, Wage determination models, Union bargaining, Corporatism, Imperfect competition and union behavior, Union oligopoly, Union membership, Union representativeness, Occupational licensure.

JEL. J51, E24, D45, D49, C79.


Unions; Wage determination models; Union bargaining; Corporatism; Imperfect competition and union behavior; Union oligopoly; Union membership; Union representativeness; Occupational licensure.

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DOI: http://dx.doi.org/10.1453/jeb.v7i3.2112


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