The Union Impact on Profits: Evidence from the Supermarket Industry

A number of Studies have found that unions lower profits, but controversy continues over whether the union impact is or is not greater in more concentrated markets or when firms have greater market shares. The empirical controversy is linked to two major underlying issues: whether unions distort capital investment decisions and whether prior research has tended to understate the level of monopoly profits in the U.S.economy. Research on the supermarket industry reveals that indeed unions profits substantially in this sector. The impact is apparently greater when local markets are more concentrated or when firms are positioned better vis-a-vis rivals, but these findings must be regarded as tentative given the multicollinearity existing in the data analyze