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Labor union bargaining and firm organizational structure


  • Chongvilaivan, Aekapol
  • Hur, Jung
  • Riyanto, Yohanes E.


Bargaining sequences, though vital to the real-world business strategies, are often treated as exogenously given. We examine bargaining sequences in the setting where a downstream firm makes a merger decision with an upstream partner and faces a negotiation with a union. When the downstream firm's power in the wage bargaining is weak, separation results and the input price bargaining proceeds prior to the wage bargaining. When the downstream firm's power in both negotiations is relatively equal, firms opt for separation and both negotiations keep on simultaneously. When the downstream firm's power in the wage negotiation is strong, the firms merge.

Suggested Citation

  • Chongvilaivan, Aekapol & Hur, Jung & Riyanto, Yohanes E., 2013. "Labor union bargaining and firm organizational structure," Labour Economics, Elsevier, vol. 24(C), pages 116-124.
  • Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:116-124
    DOI: 10.1016/j.labeco.2013.08.001

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    References listed on IDEAS

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    Cited by:

    1. Hamid Aghadadashli & Christian Wey, 2015. "Multiunion Bargaining: Tariff Plurality and Tariff Competition," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 171(4), pages 666-695, December.
    2. Alonso-Pauli, Eduard & Bru, Lluís, 2018. "Strategic delegation in procurement," MPRA Paper 84293, University Library of Munich, Germany.

    More about this item


    Bargaining sequences; Generalized Nash bargaining; Vertical integration; Double marginalization;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations


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