Partial Cross-Ownership, Cost Asymmetries, and Welfare

This paper revisits the strategic selection of the bargaining agenda in a unionized industry with potential entry and decentralized\udnegotiations for different competition modes. The incumbent chooses Right-to-Manage (RTM) or Efficient Bargaining (EB)\udconsidering two scenarios: (1) the agenda is imposed to the (potential) entrant (committed bargaining) and (2) the entrant can\udflexibly choose the agenda (flexible bargaining). In the mixed duopoly, the timing of the game is as follows: at stage 1, the EB firm\udbargains over wage and employment with its union, while the RTM firm bargains over the wage; at stage 2, the RTM firm chooses\udemployment.This paper shows that the strategic selection of the agenda strongly depends on the interaction between the degree\udof market competition, the union’s power, and the convergence or divergence between parties on the agenda’s choice. This complex\udinteraction leads to a very rich set of equilibrium outcomes, including multiple and even (as regards the union’s preferences on the\udagenda) asymmetric equilibria.Compared with alternative timings in the literature, this specification leads to substantial differences\udwith flexible bargaining: EB emerges as equilibrium in Nash strategies for a noticeably increased set of cases