UNIONIZED LABOR MARKET ANDDIVISIONALIZATION

We show the incentive for divisionalization by a monopolist producer. Incontrast to the previous literature, where divisionalization occurs for product marketadvantage, we show that divisionalization occurs if it provides strategic advantage inthe labor market. With unionized labor market, we show that divisionalization by amonopolist is profitable under both uniform and discriminatory wage setting by theunion. However, the incentive for divisionalization is higher under the formersituation...