It is sometimes argued that fears about the employment consequences of introducing new technology may lead unions to wish to delay innovations, and this may reduce incentives for a firm to carry out R&D. The authors explore these issues in a model of two countries that compete over both market share and R&D, and they restrict attention to cases where unions would wish to delay innovation. They show that allowing unions to bargain over the timing of innovation need not reduce the possibility of a firm successfully competing for R&D. However, simulations suggest that, for a particular model, allowing unions to delay innovation does not help a firm compete over R&D. Copyright 1988 by The editors of the Scandinavian Journal of Economics.
