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Bargaining Agenda in a Unionized Bilateral Monopoly
Author(s) -
Fanti Luciano,
Buccella Domenico
Publication year - 2019
Publication title -
labour
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.403
H-Index - 34
eISSN - 1467-9914
pISSN - 1121-7081
DOI - 10.1111/labr.12166
Subject(s) - monopoly , negotiation , bargaining power , economics , wage bargaining , microeconomics , subgame perfect equilibrium , labour economics , power (physics) , wage , game theory , political science , law , physics , quantum mechanics
The endogenous choice of the bargaining agenda between the two alternatives of Right‐to‐Manage ( RTM , i.e., only wages are negotiated) and Efficient Bargaining ( EB , i.e., both wages and employment are negotiated) is examined in a vertically integrated unionized bilateral monopoly with firm‐specific negotiations. Although the RTM agenda emerges as the unique subgame perfect equilibrium choice, a joint commitment to EB agendas leads both bilateral monopolists to gain higher profits, provided that the union bargaining power is adequately weak. This result is in sharp contrast to previous findings that the RTM typically secures higher profits to a single unionized monopolist.