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Strategic union delegation and strike activity

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  • Ana Mauleon
  • Vincent Vannetelbosch

Abstract

We develop a model of wage determination with private information, in which the union has the option to delegate the wage bargaining to either surplus-maximizing delegates or to wage-maximizing delegates (such as senior union members). We show that the wage outcome in case of surplus-maximizing delegates is not necessarily smaller than the wage outcome in case of wage-maximizing delegates, even when the wage bargaining with private information is close to one with complete information. However, if it is commonly known that the union is stronger than the firm and the demand is sufficiently elastic, then delegating to wage-maximizing delegates definitely increases the wage at equilibrium. The maximum delay in reaching an agreement is greater whenever the union chooses wage-maximizing delegates instead of surplus-maximizing delegates and remains finite even when the period length shrinks to zero.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 38 (2005)
Issue (Month): 1 (February)
Pages: 149-173

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Handle: RePEc:cje:issued:v:38:y:2005:i:1:p:149-173

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References

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  1. Chaim Fershtman & Kenneth L Judd, 1984. "Equilibrium Incentives in Oligopoly," Discussion Papers 642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Rubinstein, Ariel, 1982. "Perfect Equilibrium in a Bargaining Model," Econometrica, Econometric Society, vol. 50(1), pages 97-109, January.
  3. Watson, Joel, 1998. "Alternating-Offer Bargaining with Two-Sided Incomplete Information," Review of Economic Studies, Wiley Blackwell, vol. 65(3), pages 573-94, July.
  4. Stephen R. G. Jones, 1989. "The Role of Negotiators in Union-Firm Bargaining," Canadian Journal of Economics, Canadian Economics Association, vol. 22(3), pages 630-42, August.
  5. Conlin, Michael & Furusawa, Taiji, 2000. "Strategic Delegation and Delay in Negotiations over the Bargaining Agenda," Journal of Labor Economics, University of Chicago Press, vol. 18(1), pages 55-73, January.
  6. Francis K. Cheung & Carl Davidson, 1991. "Bargaining Structure and Strike Activity," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 345-71, May.
  7. Kennan, John & Wilson, Robert, 1993. "Bargaining with Private Information," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 45-104, March.
  8. Tracy, Joseph S, 1986. "An Investigation into the Determinants of U.S. Strike Activity," American Economic Review, American Economic Association, vol. 76(3), pages 423-36, June.
  9. Kennan, John & Wilson, Robert, 1989. "Strategic Bargaining Models and Interpretation of Strike Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages S87-130, Supplemen.
  10. Dertouzos, James N & Pencavel, John H, 1981. "Wage and Employment Determination under Trade Unionism: The International Typographical Union," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1162-81, December.
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Citations

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Cited by:
  1. Mauleon, Ana & Vannetelbosch, Vincent, 2010. "Market integration and strike activity," Journal of International Economics, Elsevier, vol. 81(1), pages 154-161, May.
  2. MAULEON, Ana & SONG, Huasheng & VANNETELBOSCH, Vincent, 2006. "Networks of free trade agreements among heterogeneous countries," CORE Discussion Papers 2006053, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. MAULEON, Ana & VANNETELBOSCH, Vincent & VERGARI, Cecilia, 2010. "Unions' relative concerns and strikes in wage bargaining," CORE Discussion Papers 2010076, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Ana Mauleon & Vincent Vannetelbosch, 2006. "Strategic union delegation and incentives for merger," Applied Economics Letters, Taylor & Francis Journals, vol. 13(1), pages 1-5.
  5. MAULEON, Ana & VANNETELBOSCH, Vincent, 2013. "Relative concerns and delays in bargaining with private information," CORE Discussion Papers 2013034, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Yi-Chun Chen & Xiao Luo, 2008. "Delay in a bargaining game with contracts," Theory and Decision, Springer, vol. 65(4), pages 339-353, December.

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