The theory of the open shop trade union reconsidered

Abstract This paper provides a game-theoretic foundation of the social custom approach to trade union membership. The reputation effect of belonging to the union is endogenized as the outcome of a signalling game among the workers. The signalling value of being a union member depends in equilibrium on the union density, but the form of this relationship might differ from what the previous literature assumed. The extent to which comparative statics and critical-mass effects change is also investigated.