We show that, for licensing by an outside innovator in a Cournot oligopoly, royalty licensing can generate higher payoff to the innovator than the fixed-fee licensing and auction if the labor market is unionized. This result holds irrespective of the unionization structure.

Considering Cournot competition, this note shows that, if the firms differ in labor productivities, the equilibrium wage rates under a centralized labor union are not independent of the number of firms and product differentiation if the labor union charges a uniform wage rate. However, if the...

We show the incentive for divisionalization by a monopolist producer. In contrast to the previous literature, where divisionalization occurs for product market advantage, we show that divisionalization occurs if it provides strategic advantage in the labor market. With unionized labor market, we...