Does anyone know why it is unlikely a union would be able to affect a transfer of all profits to staff through increased wages in a rent seeking situation?
2007-09-25 11:03:06 · 2 answers · asked by Anonymous in Social Science ➔ Economics
Profits either go to owners/shareholders or are reinvested in the company. If all profit went to staff, even in a rent seeking situation, all of the owners/shareholders (to whom the profits would otherwise go) would leave and no new owners/shareholders could be found and/or there would be no profits to reinvest in the company. Competitors of the unionized company would be able to attract new capital and/or reinvest their profits but the unionized company would not. The unionized company would eventually go out of business unless the union gave up the transfer of at least some of the profits.
2007-09-25 11:34:25 · answer #1 · answered by TuretzSR 2 · 0⤊ 0⤋
It is a repetitive game theory problem. They are dealing with a rent seeking management and owners and all sides, including unions have something to lose if a strike occurs.
2007-09-25 11:31:05 · answer #2 · answered by meg 7 · 0⤊ 0⤋