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Union Formation and Bargaining Rules in the Labor Market

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  • Chica Páez, Yolanda
  • Espinosa Alejos, María Paz

Abstract

This paper analyzes union formation in a model of bargaining between a firm and several unions. We address two questions: first, the optimal configuration of unions (their number and size) and, second, the impact of the bargaining pattern (simultaneous or sequential). For workers, grouping into several unions works as a price discrimination device which, at the same time, decreases their market power. The analysis shows that optimal union configuration depends on the rules that regulate the bargaining process (monopoly union, Nash bargaining or right to manage).

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Bibliographic Info

Paper provided by University of the Basque Country - Department of Foundations of Economic Analysis II in its series DFAEII Working Papers with number 2005-07.

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Date of creation: Mar 2005
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Handle: RePEc:ehu:dfaeii:200507

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Postal: Dpto. de Fundamentos del Análisis Económico II, = Facultad de CC. Económicas y Empresariales, Universidad del País Vasco, Avda. Lehendakari Aguirre 83, 48015 Bilbao, Spain
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Keywords: union formation; sequential bargaining; nash bargaining; monopoly union;

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References

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  1. Paz Espinosa, Maria & Macho-Stadler, Ines, 2003. "Endogenous formation of competing partnerships with moral hazard," Games and Economic Behavior, Elsevier, vol. 44(1), pages 183-194, July.
  2. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-97, June.
  3. Banerji, A., 2002. "Sequencing strategically: wage negotiations under oligopoly," International Journal of Industrial Organization, Elsevier, vol. 20(7), pages 1037-1058, September.
  4. Strand, Jon, 1989. "Monopoly unions versus efficient bargaining : A repeated game approach," European Journal of Political Economy, Elsevier, vol. 5(4), pages 473-486.
  5. Jun, Byoung Heon, 1989. "Non-cooperative Bargaining and Union Formation," Review of Economic Studies, Wiley Blackwell, vol. 56(1), pages 59-76, January.
  6. Askildsen, Jan Erik & Nilsen, Oivind Anti, 2002. "Union membership and wage formation," European Journal of Political Economy, Elsevier, vol. 18(2), pages 345-363, June.
  7. De la Rica, Sara & Espinosa, Maria Paz, 1997. "Testing Employment Determination in Unionised Economies as a Repeated Game," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(2), pages 134-52, May.
  8. Dobson, Paul W., 1994. "Multifirm unions and the incentive to adopt pattern bargaining in oligopoly," European Economic Review, Elsevier, vol. 38(1), pages 87-100, January.
  9. Orley Ashenfelter & James N. Brown, 1985. "Testing the Efficiency of Employment Contracts," Working Papers 573, Princeton University, Department of Economics, Industrial Relations Section..
  10. Hart, Robert A. & Moutos, Thomas, 1991. "Efficient bargains in the context of recent labour market experience and policy," European Journal of Political Economy, Elsevier, vol. 7(2), pages 169-181, July.
  11. Manning, Alan, 1987. "An Integration of Trade Union Models in a Sequential Bargaining Framework," Economic Journal, Royal Economic Society, vol. 97(385), pages 121-39, March.
  12. Naylor, R. & Cripps, M., 1991. "An Economic Theory of the Open Shop Trade Union," The Warwick Economics Research Paper Series (TWERPS) 372, University of Warwick, Department of Economics.
  13. Hartog, Joop & Leuven, Edwin & Teulings, Coen, 2002. "Wages and the bargaining regime in a corporatist setting: the Netherlands," European Journal of Political Economy, Elsevier, vol. 18(2), pages 317-331, June.
  14. Naylor, Robin A, 1995. " On the Economic Effects of Multiple Unionism," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(1), pages 161-67, March.
  15. Ariel Rubinstein, 2010. "Perfect Equilibrium in a Bargaining Model," Levine's Working Paper Archive 252, David K. Levine.
  16. Bughin, Jacques, 1999. "The strategic choice of union-oligopoly bargaining agenda," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 1029-1040, October.
  17. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  18. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-93.
  19. Strand, Jon, 2003. "The decline or expansion of unions: a bargaining model with heterogeneous labor," European Journal of Political Economy, Elsevier, vol. 19(2), pages 317-340, June.
  20. Kiander, Jaakko & Kilponen, Juha & Vilmunen, Jouko, 2004. "Labor taxation, public finance, and wage determination: evidence from OECD countries," European Journal of Political Economy, Elsevier, vol. 20(4), pages 983-999, November.
  21. MaCurdy, Thomas E & Pencavel, John H, 1986. "Testing between Competing Models of Wage and Employment Determination in Unionized Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S3-S39, June.
  22. Paz Espinosa, Maria & Rhee, Changyong, 1989. "Efficient Wage Bargaining as a Repeated Game," The Quarterly Journal of Economics, MIT Press, vol. 104(3), pages 565-88, August.
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Citations

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Cited by:
  1. canegrati, emanuele, 2007. "The single-mindedness of labor unions when transfers are not Lump-Sum," MPRA Paper 2320, University Library of Munich, Germany.
  2. Chica Páez, Yolanda & Espinosa Alejos, María Paz, 2009. "Endogenous Unions Formation," DFAEII Working Papers 2009-.07, University of the Basque Country - Department of Foundations of Economic Analysis II.
  3. canegrati, emanuele, 2006. "The Single Mindedness Theory of Labor Unions," MPRA Paper 1224, University Library of Munich, Germany.
  4. Canegrati, Emanuele, 2007. "The Single-Mindedness of Labor Unions: Theory and Empirical Evidence," MPRA Paper 1398, University Library of Munich, Germany.

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