Bargaining Outcomes Research Articles

Collective Bargaining on Employment Security: The Influence of the Legal Framework

Employers’ organisations and trade unions (also called the social partners) are given a central role to play in the specification of employment security into concrete regulations through collective bargaining. The question is how employment security can be implemented through collective bargaining. This contribution builds on the assumption that collective bargaining outcomes are influenced by inter alia political, socio-economic, and legal constrains. The article seeks to explore the legal framework of collective bargaining in which employment security is (to be) developed and to point out the ways in which this framework can have an effect on employment security and the way it is being shaped.

Disability and Economy: A Game Theoretic Approach

This paper takes a game theoretic approach to disability-related issues by constructing a model that studies the case of hereditary deafness on Martha’s Vineyard Island, USA from the seventeenth century to the early years of twentieth, where the island community adjusted itself to the hereditary deafness so that it was not treated as a disability. The model of the present paper has two stages. First of all, there are two types of continua of agents, the deaf and the non-deaf. In the first stage, the non-deaf agents become either bilinguals or monolinguals. In the second stage, agents are classified into deaf people, bilinguals and monolinguals. They are then randomly matched to form a trio to play a three-person bargaining game with infinite horizon, random proposers and language constraints. Two bargaining games are considered. The first one is a majority bargaining game where only two out of three can agree to implement a bargaining outcome. The second one is a unanimity bargaining game where all three agents are required to reach an agreement. The majority game exhibits strategic complementarity, while the unanimity game exhibits strategic substitutability. This paper also takes an inductive approach to examine how prejudice against people with disability may emerge.

This Is Contract Faculty Time

This article argues that Maurizio Lazzarato’s (2014) book Signs and Machines: Capitalism and the Production of Subjectivity is useful for apprehending the employment of contract faculty. After setting the scene of the university, I examine the mixed semiotics of the York University budget. I then look inside CUPE Local 3903’s history and politics, and focus on the video This Is Contract Faculty Time: York Faculty in Support of Contract Faculty. In the next section I describe how mixed semiotics operates at the bargaining table. Finally, I review the outcome of collective bargaining with respect to job security, political action, and truth-telling. This case of academic labour struggle shows that semiotization and subjectivation need to be better understood. I conclude with some remarks on challenges, academic freedom, and ways of reforming the faculty employment system.

Reciprocal Tariff Reductions Under Asymmetric Bargaining Power

AbstractIncreasing heterogeneity of participants that form the basis of WTO trade negotiations has raised concerns about unfair treatment of weak countries due to their lack of bargaining power. The WTO responds to these concerns by arguing that the institutional design with its specific rules such as the principle of reciprocity serves to reduce inequalities in bargaining power by giving smaller (weaker) countries more voice. A recent study has challenged this result for a particular type of reciprocity, namely the volume approach. Given the wide discretion of how reciprocal concessions are conducted, I give a more complete picture of how different kinds of reciprocity affect the bargaining outcome of asymmetric countries. It turns out that, while the volume approach amplifies the negative effects of power asymmetries, a tariff formula approach has the ability to reverse this effect. For low symmetries, the Swiss formula does the best job, whereas for larger power differences, a linear formula is best suited to reduce the impact of power asymmetries.

The kernel of a patent licensing game: The optimal number of licensees

This paper considers general bargaining outcomes under coalition structures formed by an external patent holder and firms in oligopoly markets, where a coalition structure is eventually determined by the patent holder. Our main proposition is that, for each permissible coalition structure, the kernel is a singleton; thus, the number of licensees that maximizes the patent holder’s revenue can be determined with the kernel. Specifying the upper and lower bounds of the kernel for each coalition structure, we also provide the sufficient conditions for the integer that maximizes the licensees’ total surplus to be the optimal number of licensees for the patent holder. The numerical comparison of the bargaining outcomes to those obtained by non-cooperative licensing by means of fee through take-it-or-leave-it offers is provided for a cost-reducing innovation in a linear Cournot market. Regardless of the ways of licensing, the producer surplus is maximized when the magnitude of cost reduction is large.

Bargaining with Renegotiation in Models with On-the-Job Search

This paper provides a solution for how to model bargaining in models with on-the-job search. The solution is based on wages being infrequently renegotiated. With renegotiation, the equilibrium wage distribution and the bargaining outcomes are both unique, and the model nests earlier models in the literature as limit cases when the frequency of renegotiation goes to zero or to infinity. Furthermore, the rate of renegotiation affects the nature of the equilibrium. A higher rate of renegotiation lowers the response of the match duration to a wage increase, which decreases a firm's willingness to accept higher wages. This results in a lower share of the match surplus going to workers. Moreover, a high rate of renegotiation also lowers the positive wage spillovers from a minimum wage increase, since these spillovers rely on firms' incentives to use higher wages to reduce turnover.

Buying up the Block: An Experimental Investigation of Capturing Economic Rents Through Sequential Negotiations*

This article analyzes an economic experiment designed to measure the effect of “legal technology” on the economic efficiency of Coasian bargaining. In the experiment, the agreement of many agents (called “landowners”) to transfer their property rights to a single agent (called “the developer”) generates an economic surplus. In this setting, we show that a very primitive legal technology sequential cash purchase (SC-P) is a strong implementation of a unique efficient bargaining outcome as a subgame perfect equilibrium. However, when deployed in the laboratory, SC-P results in an average loss of 60% of the economic surplus through inefficient negotiation failure. Deploying a more behaviorally robust but also more legally complex technology, a tender and conditional offer (TC-O) mechanism, halved the surplus loss and supported significant developer payoffs. These results suggest that, even absent asymmetric information, moral hazard, and transactions costs, complex legal technologies can increase bargaining efficiency.

An Experimental Investigation of Intra-Household Resource Allocation in Rural India

This study aims to investigate intra-household bargaining outcomes elicited in an artefactual field experiment design where participants completed a purchase task of real commodities. Married couples separately expressed their initial preferences over commodities. The bargaining process in the experiment was exogenously introduced by sharing information about partners’ preferences in the treatment group. We hypothesized that the spouse with weaker bargaining position at the household level would consider the information of their partner’s preferences while making own consumption decisions more compared to their partner. Therefore, they may deviate from their own preferences when purchasing commodities. More than 230 married couples from two villages in the Tamil Nadu state of India participated in the experiment. It was observed that information about partners’ spending preferences resulted in reduced final allocations for female participants. However, the deviation was not significantly different from the original intention to spend. Therefore, information about partners’ preferences may not be an effective medium to elicit bargaining power in the context of jointly-consumed household commodities. Subgroup analyses were performed to identify any heterogeneous treatment effects.

Leverage and Bargaining Benefits: Evidence from U.S. Hospitals

This paper uses the health care industry as a novel laboratory in which to study a firm's strategic use of debt to enhance its bargaining power during negotiations with non-financial stakeholders. I show that reimbursement rates negotiated between a hospital and insurers for a specific procedure are higher when the hospital has more debt. I show that this effect is stronger when hospitals have less bargaining power relative to insurers ex ante. The contribution of this paper is to provide direct evidence that debt improves a firm's bargaining outcomes.

Patent licensing and bargaining with innovative complements and substitutes

Inventors and producers bargain over royalties to license multiple patented inventions. In the first stage of the bargaining game, inventors offer licenses to producers and producers demand licenses. In the second stage of the game, inventors and producers engage in bilateral bargaining over licensing royalties. The analysis shows that there is a unique weakly dominant strategy equilibrium in license offers. The main result is that this bargaining procedure maximizes the joint profits of inventors and producers. Licensing royalties are less than bundled monopoly royalties. The efficiency of the bargaining outcome contrasts with the inefficiency of patent royalties in the Cournot posted prices model. The analysis explores the implications of the main results for antitrust policy concerns including Standard Essential Patent holdup, royalty stacking, patent thickets, the Tragedy of the Anticommons, and justification for patent pools. The discussion also considers how imperfect intellectual property rights affect bargaining over royalties.

Labour market regulation and collective bargaining in Portugal during the crisis: Continuity and change

This article examines the changes to employment regulation in Portugal during the sovereign debt crisis and assesses their impact on collective bargaining in manufacturing. The changes were wide-ranging and had a negative immediate impact on the process and outcome of bargaining. While this is consistent with the experience of other EU member states in similar circumstances, the changes in Portugal continued the pre-crisis path of reform. Despite significant corrosion and weakening of collective bargaining, there were also signs of resilience. Nevertheless, prospects for a renewed regulatory role for collective bargaining still appear uncertain. We offer some explanations for the distinctive experience in Portugal.

Continuity and change in joint regulation in Europe: Structural reforms and collective bargaining in manufacturing

This article introduces seven national studies which examine the impact of austerity measures on collective bargaining in manufacturing in the European Union (EU) countries most affected by the crisis. We explore the changing dynamics in the relationships between domestic actors in the period leading up to the crisis and the influence of supranational actors thereafter. Austerity measures have undermined the structure, process, content and outcomes of collective bargaining, though the nature and degree of changes are conditioned by path-dependent factors of each national system.

Snakes and ladders: rethinking social mobility in post-reform India

The question of social mobility in a terrain of increasing inequality has gained particular urgency in post-reform India. We approach social mobility not as a one-way ascent toward the top, rather as a risk-laden enterprise prone to fluctuations that include both incremental gains and the possibility of sliding downwards. We argue that to ‘move up the ladder’ is not merely a matter of individual choice or hard work in the face of odds as free-market believers have long held. It is as much an outcome of collective political bargaining, privileges that dominant class and caste status affords, access to resources and, indeed, occasional luck. Two propositions follow. First, we suggest that the state remains albeit as a reluctant enabler of social mobility in the age of markets. Second, the participation in the new economy hinges also upon one’s ability to ‘dress up’ for the part, to be able to craft one’s look as if one belonged to spaces – work or leisure – that one desires to inhabit. The work of appearances, we suggest, does not operate at individual levels alone, it also encompasses the nation’s spectacular projection of itself in the global political economy.

Gradual collective wage bargaining

This paper presents an alternative implementation of firm-level collective wage bargaining, where bargaining proceeds as a finite sequence of sessions between a firm and a union of variable size. We investigate the impact of such a ‘gradual’ union on the wage-employment contract in an economy with concave production. In a static framework, the resulting equilibrium is equivalent to the efficient bargaining outcome. In a dynamic framework with search frictions, we demonstrate that gradual collective wage bargaining coincides with all-or-nothing bargaining when bargaining takes place in fictitious time before production.

Balance of power and the propensity of conflict

We study the role of an imbalance in fighting strengths when players bargain in the shadow of conflict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of conflict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of conflict is higher if power is more imbalanced. Even though endogenous bargaining outcomes reflect the players' unequal fighting strengths, strategic uncertainty causes outcomes to be most efficient when power is balanced. In turn, the importance of exogenous mediation proposals depends on the balance of power.

The impact of bicameralism on the disproportionality of cabinet portfolio allocation

This study examines whether bicameralism affects cabinet composition in parliamentary democracy. While previous studies have examined the effect of bicameralism on the legislative process and cabinet duration, little is known about its effect on cabinet post allocation. Therefore, this study examines how and why the institutional and partisan strengths of upper chambers affect the outcome of coalition bargaining and post allocation. Theoretically, I argue that partisan strength in upper chambers enhances a party’s bargaining position, resulting in disproportionality between the party seat and cabinet portfolio share of the lower chamber in coalition gov ernments. The empirical results indicate that the level of disproportional ity in cabinet portfolio allocation is higher in countries with strong upper chambers than in countries with weak or no upper chambers. I also investi gate party level data in countries with strong upper chambers. After control ling for the party share of lower chambers in these countries, the advantage accrued by the upper chamber in terms of party seat share is likely to result in obtaining a higher share of cabinet portfolios.

Industrial action involving teachers’ unions in Norway and Denmark: comparing bargaining trends and outcomes

The purpose of this article is to contribute to an improved understanding of (1) changes in bargaining models between employer and employees, and (2) differences in these changes in Norway and Denmark. The aim is to explain divergent outcomes of collective bargaining regarding teachers’ working hours in Norway and Denmark. Social media is assumed to reinforce grass-roots rebellion level as well as the internal decision-making structure within the unions. The theoretical framework draws on situational analysis in order to understand how exercising of power at different levels influences the negotiations between employer and employee as well as the outcome. Drawing on situational analysis, the research method has a comparative approach, comparing two case studies, one from the Norwegian context and one from the Danish. The Danish employers’ organisation succeeded to perform major changes after a lock out, whereas the same ambition failed in Norway because of a teacher strike supported by social media. By using a comparative method, based on analyses of the two cases, the author aims to explain possible mechanisms of negotiation. The findings, presented in the discussion, show that new circumstances concerning the work of the teacher unions are disrupting the prevailing industrial negotiation model. The force of social media and newspapers in evoking public sympathy for teacher unions in Norway is an important explanatory factor regarding outcome differences in Norway and Denmark.

Gradual Collective Wage Bargaining

This paper presents an alternative implementation of firm-level collective wage bargaining, where bargaining proceeds as a finite sequence of sessions between a firm and a union of variable size. We investigate the impact of such a 'gradual' union on the wage-employment contract in an economy with concave production. In a static framework, the resulting equilibrium is equivalent to the efficient bargaining outcome. In a dynamic framework with search frictions, we demonstrate that gradual collective wage bargaining coincides with all-or-nothing bargaining when bargaining takes place in fictitious time before production.

Gradual Collective Wage Bargaining

This paper presents an alternative implementation of firm-level collective wage bargaining, where bargaining proceeds as a finite sequence of sessions between a firm and a union of variable size. We investigate the impact of such a 'gradual' union on the wage-employment contract in an economy with concave production. In a static framework, the resulting equilibrium is equivalent to the efficient bargaining outcome. In a dynamic framework with search frictions, we demonstrate that gradual collective wage bargaining coincides with all-or-nothing bargaining when bargaining takes place in fictitious time before production.

Writing-Down Debt with Heterogeneous Creditors: Lock Laws and Late Swaps

Abstract The presence of “holdouts” in recent sovereign debt swaps poses a challenge to bargaining models which assume all creditors to be homogeneous. We modify the Rubinstein “alternating offers” framework so as to accommodate exogenous creditor heterogeneity – specifically holdouts more patient than other bondholders. The “second best” equilibrium derived is an initial offer and an associated “lock-law” sufficient to tempt impatient creditors into a prompt bond exchange. This is followed by a delayed, but more generous, swap with the patient creditors, timed to take place when the lock-law expires. In practice, however, the presence of holdouts may be endogenous: they may be late-comers who buy distressed bonds with a view to litigating for the full face value plus their costs of waiting. Provisions for protecting other bond holders from the negative externality caused by such tactics are briefly discussed. However, where the judge has mandated good faith bargaining with holdout creditors, the bargaining outcome we derive may be useful to indicate a basis for compromise.