Stakeholders, Bargaining and Strikes
In this paper they study bilateral bargaining problems with interested third parties, the stakeholders that enjoy benefits upon a bilateral agreement. We explore the strategic implications of this third party involvement. The main finding is that the potential willingness of the stakeholder to make contributions to promote agreement may be the source of severe inefficiency. However, and more surprisingly, for a wide range of parameter values this outcome is better for the stakeholder than if he enters bargaining directly. The results lend support to the tendency towards decentralisation of pay bargaining in the public sector in Europe.[IZA DP No. 395]
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