This paper indicates that the extent of collective bargaining coverage in an industry may depend on the differences in firms productivity levels within the industry. Less pronounced differences in productivity levels make it easier to design collective wage contracts that are accepted by a wider...

This paper establishes a link between the extent of collective bargaining and the degree of productivity dispersion within an industry. In a unionised oligopoly model we show that for only small differences in productivity levels. a sector-union can design a collective wage contract that covers...