Abstract
This paper investigates the patterns of bargaining in multinational enterprises (MNEs) in the presence of labor unions coordination activities. It derives the bargaining regimes which arise as sub-game perfect equilibria, and considers both simultaneous and sequential games where parties choose whether to coordinate wage negotiations across subsidiaries. It shows that unions’ per member transaction costs may attenuate the conflict of interests between bargaining parties as regards the centralization level at which negotiations should take place.
Highlights
Bargaining between multinational enterprises (MNEs) and organized workforce is a subject of key relevance in modern economics
This paper has investigated the patterns of bargaining which arise in equilibrium between a MNE and plant-level unionized workforce in the presence of unions’ coordination costs
Of the game, the final stages are common: after the bargaining parties have chosen their coordination strategies, wage negotiations take place; given the bargained wages, the MNE determines the optimal allocation of production among plants
Summary
Bargaining between multinational enterprises (MNEs) and organized workforce is a subject of key relevance in modern economics. Either full decentralization or partial centralization arises: the bargaining regimes in equilibrium depend on the characteristics of the product market integration process (one/two-way trade between countries) While these contributions analyze negotiations in national oligopolies, the topics of the collective bargaining structure in MNEs and its transnational dimension are barely explored. Wage formation at company level in the context of an international productive structure is the subject of Borghijs and Du Caju (1999) They analyze unions’ cross-border cooperation vs plant-specific wage settings within a single MNE producing homogeneous goods in an integrated product market. Both bargaining parties select their coordination strategy in the first stages This differs from Horn and Wolinsky (1988b) and Bárcena-Ruiz and Garzón (2002), where each agent chooses the organization of wage negotiations taking as given the bargaining structure of the other agent.
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