Multi-Unionism at the Firm Level: The Impact of Asymmetric Nash Bargaining Solutions on Labor Unions’ Merger Incentives

Abstract

This paper investigates the incentives of labor unions to merge in a right-to-manage model for several bargaining regimes. It is assumed that the worker groups produce different goods, and that the products are either substitutable in consumption (tariff competition), complementary (tariff plurality), or are independent of one another. The already existing merger results can be replicated in a right-to-manage model when joint bargaining is compared to simultaneous and sequential bargaining: labor unions have strict incentives to merge if the two products are substitutes in consumption, while they bargain independently if the products are complements in consumption. Further, there exists a first-mover advantage for unions under sequential bargaining for complementary products. Workers, on the other hand, benefit from a first-mover advantage in terms of their wage for the entire degree of product differentiation under sequential bargaining.