Baldwin (1983) asks whether a firm can credibly deter union opportunism that would lead to underinvestment. We show that the punishments Baldwin considers credible exclude tougher threats that only have the appearance of being self-destructive. If the firm\u27s discount factor is sufficiently close to one, union opportunism can indeed be deterred. Moreover, we show that given the firm\u27s discount factor, a shorter lifetime of capital does not necessarily promote efficiency. Although, as Baldwin emphasizes, it does enhance the firm\u27s ability to punish union opportunism, it also creates adverse incentives for the firm to engage in opportunistic employment cuts
