DP1527 | To be (Unionized) or Not to be? A Case for Cost-raising Strategies

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This paper analyses the decision by a firm over whether or not to recognize unions (and therefore enter the bargaining process) in order to gain market power in unionized markets. We show that union power coupled with the nature of the union-firm bargaining process - i.e. scope and structure - are key determinants of a firm?s choice to be unionized and to strategically adopt cost-raising strategies.