Union structure and firms incentives for cooperative R&D investments

We examine how different unionisation structures and the spillovers of R&D activities affect R&D investments and firms’ incentives to form a Research Joint Venture. We find that whenever firms invest non-cooperatively, an industry union increases R&D investments, if industry specific spillovers are low. In case of a Research Joint Venture, investments are always higher under firm-level unions. We also find that firms’ incentives to form a Research Joint Venture are stronger when they face an industry union, if spillovers are low. Rigidities in the labour market, such as high unemployment benefits or/and a central union, have negative effects on employment, output and profits and hinder the diffusion of the efficiency created by a RJV to consumers and employees. Integrated labour market and R&D policies are also discussed.