Sequencing Strategically: Wage Negotiations Under Oligopoly
In a unionized oligopoly, such as the American automobile industry, should the union (such as the United Auto Workers) negotiate new contracts by bargaining with the firms simultaneously, or should it "strategically sequence" its bargaining partners? This paper analyzes two models of noncooperative bargaining and product market oligopoly. In the first, bargaining is over wages and employment, in the second, it is over wages alone; employment and output are determined by the firms in a post negotiation product market game. One effect of sequencing bargaining partners is present in both scenarios: it allows preexisting contracts at the firms not being currently bargained with to act as "status quo points" that influence the bargaining outcome of the negotiations currently on. The better are the preexisting contracts from the union's point of view, the more attractive is the option of sequencing. In the second model, there is another channel, operating via the post negotiation product market game that tends to make sequencing preferable. By negotiating a relatively high wage with the first firm, the union can raise the profitability of the second firm in the product market game ; consequently, it can get a higher wage there as well, as its share in the incremental revenue that accrues. Moreover, the first firm is less reluctant to concede a higher wage (than under simultaneity) since it knows that the negative impact of that on its profits will be partly alleviated as the second firm will also make a larger concession.
|Date of creation:||May 1999|
|Date of revision:|
|Contact details of provider:|| Postal: Delhi 110 007|
Phone: (011) 27667005
Fax: (011) 27667159
Web page: http://www.cdedse.org/
More information through EDIRC
|Order Information:|| Web: http://www.cdedse.org/ Email: |
When requesting a correction, please mention this item's handle: RePEc:cde:cdewps:65. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sanjeev Sharma)
If references are entirely missing, you can add them using this form.