Abstract
This chapter discusses the influence of unions on the management of nationalized enterprises or public utilities. The influence of employees' pressure groups on the management of nationalized enterprises or public utilities differs widely from country to country. They typically try to maximize value added per employee, and the disincentive effects of such a policy are well known from both practice and theory. Labor unions can oppose the job restrictions that often result from such a firm's policy. Other extremes are nationalized firms, which behave in the same way as private firms without the influence of labor unions. Hence, in these cases, there is no difference between the objectives of the managers of nationalized and of private firms. The chapter describes the compromise between the management of a public enterprise and the representatives of a labor union.
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