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Collective Bargaining under Non-Binding Contracts

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  • Dobbelaere, Sabien

    ()
    (VU University Amsterdam)

  • Luttens, Roland Iwan

    ()
    (Ghent University)

Abstract

We introduce collective bargaining in a static framework where the firm and its risk-neutral employees negotiate over wages in a non-binding contract setting. Our main result is the equivalence between the non-binding collective equilibrium wage-employment contract and the equilibrium contract under binding risk-neutral efficient bargaining. We also demonstrate that our non-cooperative equilibrium wages and profits coincide with the Owen values of the corresponding cooperative game with the coalitional structure that follows from unionization.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5518.

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Length: 15 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5518

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Keywords: collective bargaining; union; firm; bargaining power; non-binding contract;

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  1. Catherine C. de Fontenay & Joshua S. Gans, 2003. "Organizational Design and Technology Choice under Intrafirm Bargaining: Comment," American Economic Review, American Economic Association, vol. 93(1), pages 448-455, March.
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