Bilateral Delegation in Duopoly Wage and Employment Bargaining | Zendy

Chatterjee Ishita | Zendy; Saha Bibhas | Zendy

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Bilateral Delegation in Duopoly Wage and Employment Bargaining

Author(s) -

Chatterjee Ishita,

Saha Bibhas

Publication year - 2017

Publication title -

managerial and decision economics

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.288

H-Index - 51

eISSN - 1099-1468

pISSN - 0143-6570

DOI - 10.1002/mde.2807

Subject(s) - wage bargaining , delegation , duopoly , bargaining power , cournot competition , delegate , economics , microeconomics , wage , incentive , bargaining problem , labour economics , management , computer science , programming language

We study bilateral delegation in wage and employment bargaining between firms and unions in a Cournot duopoly. Incentive delegation creates frictions for each party between its objectives of within‐firm rent extraction and market/job stealing from the rival firm. The net effect is restraint in production, resulting in a larger bargaining pie. But each player's payoff will be inversely related to his bargaining power. We also show that if players are given a choice to delegate, they will not resort to delegation when their bargaining power is sufficiently high. This is in contrast to the scenarios commonly assumed in many models. Copyright © 2016 John Wiley & Sons, Ltd.

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