Do Unions Capture Monopoly Profits?

Abstract

This paper challenges the conclusion reached in recent studies that unions reduce profits exclusively in highly concentrated industries. From their review of previous studies and their analysis of 1977 data on 367 Fortune 500 firms, the authors conclude that there is no convincing evidence that concentration produces monopoly profits for unions to capture. Moreover, they find that the union wage effect is not greater in concentrated industries, as suggested by the hypothesis that unions capture concentration-related profits. Evidence is found suggesting that a firm's market share, its expenditures on research and development, and its protection from foreign competition provide more likely sources for union rents than does industry concentration.

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