Table of Contents
Economics Research International
Volume 2015, Article ID 530890, 7 pages
http://dx.doi.org/10.1155/2015/530890
Research Article

On the Strategic Choice of Union-Oligopoly Bargaining Agenda: Further Results

1Department of Economics, Kozminski University, Jagiellońska Street 57/59, 03-301 Warsaw, Poland
2Department of Economics and Management, University of Pisa, Via Cosimo Ridolfi 10, 56124 Pisa, Italy

Received 23 July 2015; Revised 26 August 2015; Accepted 2 September 2015

Academic Editor: João Ricardo Faria

Copyright © 2015 Domenico Buccella and Luciano Fanti. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

This paper revisits the strategic selection of the bargaining agenda in a unionized industry with potential entry and decentralized negotiations for different competition modes. The incumbent chooses Right-to-Manage (RTM) or Efficient Bargaining (EB) considering two scenarios: (1) the agenda is imposed to the (potential) entrant (committed bargaining) and (2) the entrant can flexibly choose the agenda (flexible bargaining). In the mixed duopoly, the timing of the game is as follows: at stage 1, the EB firm bargains over wage and employment with its union, while the RTM firm bargains over the wage; at stage 2, the RTM firm chooses employment. This paper shows that the strategic selection of the agenda strongly depends on the interaction between the degree of market competition, the union’s power, and the convergence or divergence between parties on the agenda’s choice. This complex interaction leads to a very rich set of equilibrium outcomes, including multiple and even (as regards the union’s preferences on the agenda) asymmetric equilibria. Compared with alternative timings in the literature, this specification leads to substantial differences with flexible bargaining: EB emerges as equilibrium in Nash strategies for a noticeably increased set of cases.