Non-cooperative Bargaining and Union Formation

Abstract

We study a union formation decision problem when workers consist of two groups distinguished by different productivities. Workers may form either a joint union or two separate unions. The whole decision process is modelled as an extensive-form bargaining game. Workers form a joint union when the sizes or productivities of the groups are similar. In the first case, there is a wage differential which is more (less) than proportional to the productivity difference if the size of the more productive is smaller (larger) than that of the less productive. In the second case, there is no wage differential.l. Exceptions are Rosen (1970) and Hersoug 1983), Rosen 1970) provided a theory and empirical tests of the effect of unionization on wage differentials between skilled and unskilled workers, Hersoug (I 983) gave an explanation as to why small unions can get higher wages than large unions in an oligopolistic competition of labour sales. 59

Bargaining, Mergers, and Technology Choice in Bilaterally Oligopolistic Industries

“…If the created net surplus is smaller at the margin, which is the case with increasing unit costs or substitutes, the respective market side prefers to become integrated. While the exploration of this principle in the framework of a (bilaterally) oligopolistic market is to our knowledge new, the general principle has been already detected by Horn and Wolinsky (1988b) and Jun (1989). Both papers analyze bargaining between one Þrm and two workers (or groups of workers).…”

Multi-Issue Bargaining and Linked Agendas: Ricardo Revisited or No Pain No Gain

“…Indeed, if b 2 > s + 1 b 1 , the outcome is a corner solution. In this case, 10 The structure of o¤ers and countero¤ers assumed here is that, if bargaining on S 1 ends with agent 1 accepting an o¤er from agent 2, then agent 1 makes the …rst o¤er on S 2 . Similarly, if bargaining on S 1 ends with 2 accepting an o¤er from 1, then 2 makes the …rst o¤er on S 2 .…”

“Nash-in-Nash” Bargaining: A Microfoundation for Applied Work

“…Instead, they are predominantly determined by bilateral negotiations between medical providers and insurers. A substantial theoretical literature has sought to understand the equilibrium outcomes of bilateral bargaining in a variety of settings, including buyer-seller networks (e.g., Kranton and Minehart, 2001;Corominas-Bosch, 2004;Manea, 2011) and wage negotiations (e.g., Jun, 1989;Stole and Zwiebel, 1996). To derive meaningful predictions, many of these papers have focused on environments where a single agent is involved in all bargains, or where a transaction between two agents does not affect the value of trade for others.…”