Relative Bargaining Strength Research Articles

The Determinants of Relative Wage Change in Australia

This article uses data from 3500 Australian workers to investigate which factors have had a significant influence on microeconomic wage growth over the years 1997 to 2000. The relative importance of four types of factors—outside incomes, demand for labour, workers' relative bargaining strength and category of wage contract—are compared. Basic individual demographic characteristics and some indicators of workers' bargaining power provided most of the explanation for wage changes. Proxy variables for labour demand, while significant and correctly signed, were small in magnitude.

Tax and Subsidy Incidence Equivalence Theories: Experimental Evidence from Competitive Markets

A basic tenet in elementary microeconomics is tax incidence equivalence. This tenet holds that the burden of a unit tax on buyers and sellers is independent of who actually pays the tax. By contrast, policymakers and the public often mistake statutory incidence for economic incidence. Recent evidence of the empirical validity of tax incidence equivalence is mixed. In this paper, using competitive laboratory markets, I test both tax incidence equivalence and an analogous theorem I refer to as subsidy incidence equivalence. For sufficiently large markets, the results show strong support for both theories. In these markets, there is little to no evidence, even in the short run, of the popular misperception that statutory incidence equals economic incidence. In smaller markets in which competitive forces are weaker and relative bargaining strengths may play a role, the evidence for tax incidence equivalence is weaker as minor price discrepancies may persist between markets.

Bargaining power and wages: A game-theoretic model of gender differences in union wage bargaining

Abstract In this paper a model of gender differences in the process of wage bargaining is developed, with the aim of assessing the potentials of bargaining theory in contributing to a better understanding of the male/female wage gap. It is shown that if the assumption of a united union is relaxed in order to allow for conflicts of interest between the sexes, two interesting factors that might cause women's wages to differ from those of men come into sight. First, the relative bargaining strengths of female and male unionists, and second, the threat points of female and male unionists.

Bargaining power and wages: A game-theoretic model of gender differences in union wage bargaining

In this paper a model of gender differences in the process of wage bargaining is developed, with the aim of assessing thé potentials of bargaining theory in contributing to a better understanding of the male/female wage gap. It is shown that if the assumption of a united union is relaxed in order to allow for conflicts of interest between the sexes, two interesting factors that might cause women's wages to differ from those of men come into sight. First, the relative bargaining strengths of female and male unionists, and second, the threat points of female and male unionists.

The revolution in domestic hotel management contracts

The changing economic environment of the hotel industry has altered the traditional relationship of management company and owner. The results of those changes in relative bargaining strength are reflected in the provisions of contemporary American management contracts

Net Employment Reserves and Occupational Wage Rate Determination

This paper develops a novel approach to occupational wage rates. Our underlying hypothesis is that the factors that detennine the relative average wage rate paid to employees in an occupation are aspects of the relative bargaining strength of employees in that occupation. No appeal need be made to individual labor productivities in explaining occupational wage rates.' A new variable-what we term the employment reserve-is introduced. This variable is not included in standard earnings functions used to estimate determinants of wage rates, since these are based on productivity models of one sort or another. The net reserve provides a measure of the relative degree of competition for employment in a particular occupation. As such, according to our hypothesis, it is an important factor (though by no means the only factor) affecting the relative bargaining strength of employees in an occupation. Hence, it is an important factor affecting the occupational wage rate. We will outline a theoretical model of occupational wage-rate determination by bargaining strength in which the net employment reserve is embedded. Then we present a cross-sectional study that encompasses virtually all occupations in the economy. This involves, on the one hand, estimating a standard earnings function predicated on the chief productivity theory of wage rates-notably neoclassical human capital theDavid Gleicher is an associate professor in the Department of Economics, Adelphi University, Garden City, NY. Lonnie K. Stevans is an associate professor in the De

Bargaining Rules for a Thin Spot Water Market

Markets for water rights have long been advocated to resolve user conflicts and to improve efficiency (Trelease 1961; Hartman and Seastone 1970). The potential for efficiency gains from market allocation of water has been well established (Burness and Quirk 1979; Eheart, Lyon, and Wong 1983; Moore 1986). Almost all studies of water markets address the transferability of long-term water rights, i.e., or property rights (Eheart et al. 1983; Lyon 1986; Saliba, Bush, and Martin 1987; Crouter 1987).' However, rental or spot markets for water can improve efficiency by allowing allocational adjustments in line with changing conditions without disturbing the base rights system. Exchanges of either base rights or spot rights that entail a change in the point of diversion may result in third-party effects even in the absence of return flow problems (Johnson, Gisser, and Werner 1981; Eheart et al. 1983).2 Such third-party effects place practical limits on the geographic scope of water exchanges and result in a market, i.e., a market with few eligible participants. Thin markets are likely to be manipulated by participants, leading to inefficiency. Unless suitable bargaining rules are designed to counter market manipulation, the efficiency gains from water exchanges cannot be fully realized. This paper uses multilateral bargaining models based on a game theoretic approach to address bargaining rules that will facilitate the efficient operation of a thin water market across a variety of bargaining environments. Institutional features such as the size of the water market, the water rights system, the distribution of farm sizes, and the level of participants' information define the bargaining environment. The models are translated into computer simulations based on data representing irrigation water demand in the Crane Creek Watershed of Kankakee County, Illinois. Thin water markets are likely to be the rule rather than the exception, especially in the U.S. West where many streams with insufficient flows are fully or overappropriated. Given this fact, it is crucial to investigate how the efficiency of a thin water market is affected by the relative bargaining strengths of the participants and to suggest suitable bargaining rules that could improve the social gains achieved in thin water markets.

Social security and the family: Coping with seasonality and calamity in rural India

This article examines how poor rural families in India cope with the food insecurity associated with seasonal troughs in the agricultural production cycle, and with calamities such as drought and famine; the effectiveness of the coping mechanisms they adopt; the intra‐household sharing of the burden of coping; and the appropriate state and non‐state interventions that would strengthen the survival mechanisms adopted by the families themselves. The family is seen here as a bargaining unit, the ability of different members to command food (among other resources) depending on their relative bargaining strengths, determined in turn by their ownership endowments (of land, labour, etc.), exchange entitlements, and external social and communal support systems. Gender and age both form the basis of intra‐family inequality in this respect. While seasonality reveals a face of the family which is one of co‐operation, famine mirrors one of disintegration. In both contexts, the burden of coping falls disproportionatel...

From Lin Biao to Deng Xiaoping: Elite Instability and China's U.S. Policy

In the field of Chinese foreign policy, the debate continues over the importance of domestic and international factors in policy–making. Scholars arguing in favour of the special importance of domestic politics in the formulation of policy point to the existence of elite differences over foreign policy and contend that the shifting fortunes of individual leaders and the leadership turnover associated with succession politics can significantly shape China's security policy. Other scholars stress the importance of such international factors as shifting global balances of power, changing alliance patterns, and relative bargaining strengths in Beijing's foreign policy.

Determinants of premiums in acquisition transactions

AbstractThis paper presents a framework to identify the determinants of acquisition premiums so as to explain their cross‐section variability. Observed premiums are predicted to be positively related to (1) the magnitude of the acquiring firm's estimate of acquisition gains and (2) the acquired firm's relative bargaining strength. Increased acquisition gains are argued to result from two sources—underpricing and undermanagement. The variables representing these sources are constructed from pre‐acquisition data. A gains variable based on the post‐acquisition stock‐price reactions of the acquiring and acquired firm is also constructed. It is argued that acquired‐firm bargaining strength is enhanced by an increase in the degree of competition in the acquisitions market and by the inclusion of anti‐takeover amendments in the acquired firm's corporate charter. The predictions are tested on a sample of 77 completed cash‐for‐stock and stock‐for‐stock acquisitions over the time period 1975–80. The empirical results provide strong support for the predicted effects of the determinants of (2) and mixed support for the determinants of (1). This is the first study to document the predicted effects of anti‐takeover amendments on observed premiums.

Bargaining with Two-sided Incomplete Information: An Infinite Horizon Model with Alternating Offers

This paper examines an infinite horizon bargaining model, incorporating five features: two-sided incomplete information (with potentially information-revealing strategies), an infinite horizon, uncertainty concerning the potential gains from trade, an illumination of interesting qualitative bargaining issues, and plausible (free from arbitrarily specified out-of-equilibrium conjectures) equilibria. These features, motivated in the paper, have powerful implications. A Nash equilibrium exists, and is generically both unique and sequential. Comparative static implications of variations in the game's specifications are developed. We find that natural indications of bargaining strength emerge from the model, and establish the intuitive result that an increase in a player's relative bargaining strength makes that player more likely to capture the gains from bargaining.

International Bargaining and Domestic Politics: U.S.-China Relations since 1972

The concepts of triangular structure and pattern of relations are useful in understanding conflict in U.S.-China relations, particularly over Taiwan, and in explaining the context in which Chinese domestic politics influences the P.R.C.'s policy toward the United States. Through their influence on relative bargaining strengths, shifting patterns of relations have determined Beijing's readiness either to push for change in U.S.-Taiwan relations or to accept the status quo until China's bargaining position improves. The pace of policy change within a particular pattern of relations has been influenced by the P.R.C.'s domestic politics, which has also compelled the leaders to protect their domestic position by issuing statements aimed at the domestic audience.

Political Risk Analysis and Direct Foreign Investment: Some Problems of Definition and Measurement

Research and analysis of political risk assessment in overseas areas is encumbered with serious definitional and methodological problems. These problems make any interpretive findings at best highly crude (and of limited applicability) and at worst irrelevant and subject to misinterpretation. In light of the nature of these problems, not much appears to be gained by introducing more sophisticated analytical techniques. A realistic approach to political risk analysis must take into account three sets of factors: the general sociopolitical international environment; the foreign and domestic policies of the home country of the multinational parent and those of the host country; and the relative bargaining strength of a particular mutlinational corporation based on its international investment strategy, technological lead, and investment exposure in a host country.

A Note on the Use of Incorporation as an Escape from Usury Ceilings

THE STRUCTURE of usury statutes varies from state to state. In particular some states have a limit on loan transactions involving unincorporated businesses while having no limit on transactions involving corporations. The purpose/ policy behind this dichotomy stems from the industrial organization argument about relative bargaining strengths in a market. The unincorporated business is purported to involve people unsophisticated in financial transactions who, therefore, need protection. On the other hand, the corporation is large and sophisticated in financial matters and can fend for itself. The historical precedent for this distinction is the I850 case of.JVew York Dry Dock Bank v. American Life Insurance & Trust Co.' In the Dry Dock Bank Case a commercial borrower was able totally to evade repayment on a loan, both principal and interest being excused, because the court found that a 2000 pound discount on a 50,000 pound loan at 6 percent carried its charges past permissible interest rates of 7 per cent. The outcry was so great that the New York legislature created the corporate exemption to its usury statute so that no other commercially sophisticated lender like the Dry Dock Bank might hide behind the usury law to discharge its debts.2 The purpose of this brief paper is to suggest that the effects of the dichotomy may be slightly different from the salutary objectives of the critics of the Dry Dock decision or of the legislators of the corporate exemption. In particular, we present some evidence which suggests that the corporate exemption induced unincorporated firms to incorporate simply to avoid usury limits.

A conceptual framework for analysis of primary commodity markets

The paper begins with a critique of the traditional neoclassical theory as a tool for analysing commodity markets, and suggests that a viable theory needs to be developed from the concept of ‘market power’, as expressed in the relative bargaining strengths of transnational corporations active in the commodity production and trade of developing countries, and of the governments and business interests of host countries. A discussion of the principal elements comprising relative bargaining strength, divided into commodity-specific, country-specific and international, is followed by a brief consideration of alternative policy options for developing countries aimed at improving their share of the benefits from their commodity exports to developed countries.

THEORIES OF BUSINESS BEHAVIOUR AND THE DISTRIBUTION OF SURPLUS PROFITS

SUMMARYThis paper attempts a partial reformulation of the theory of the firm around the central issue of the distribution of profits. According to the institutional, market and purchasing environment in which they operate, the firms can generate surplus profits. Depending on their bargaining strength participants in the firm viz.– management, shareholders, customers, labour and suppliers of other inputs – can share in this surplus by securing payments above opportunity costs. The paper (i) presents a taxonomy of business conduct for incorporating the distribution of profits into existing explanations (ii) examines the extent to which these explanations require modification if this is done, (iii) explores the determinants of the relative bargaining strengths of the stakeholders, and (iv) suggest some implications for future studies of business behaviour.

The Relative Bargaining Strengths of the Developing Countries

A particular aspect of economic stability to which special attention must be given is the stabilization of world raw material prices .... The unfortunate consequences of large fluctuations in these prices have been particularly evident in the past few years. ... While the need for avoiding excessive fluctuations will be readily recognized, there is no easy solution that is equally applicable to all (Organization for European Economic Cooperation, pp. 26-27). This description of the commodity problem could have been written in 1974, but in fact it was written more than two decades ago. The lack of progress since then in dealing with commodity prices-both to reduce the amplitude of fluctuations and to maintain or increase their prices relative to those of manufactured goods-has been a frequent source of friction between the industrialized and the developing countries. Efforts to manage commodity prices through international cooperation have not been lacking but, in general, these have not been very successful. The world economic situation and the actions of groups of commodity-producing countries have heightened the awareness of raw material producers and consumers alike to the possibilities of supply management. Speculation about the chances for success of such actions obviously must be larded liberally with humility derived from the knowledge that a mere three years ago it was held with certitude that a collective effort to raise oil prices was impossible. Nonetheless, it is worthwhile to set out the interrelationships bearing on the access to, and the prices of, primary commodities so that there will be a framework for discussion of alternative scenarios. The unilateral increase of oil prices, the general commodity price boom of 1972-74, and the concern with the possible depletion of the world's resources is sometimes seen as the beginning of a major shift in power relationships between the industrialized and developing countries. Fred Bergsten called attention to the interaction of these factors as early as the summer of 1973 and recently has expanded on this theme.

The Determinants of Aerospace Profit Rates 1951-1971

There are a number of theoretical approaches which have been applied to the determination of profits in the American aerospace industry. Carroll [5, p. 545] views the government sector as essentially a bilateral monopoly, suggesting that the profit outcome will be determined by the relative bargaining strengths of the participants. Scherer [14, p. 371] describes the process of contract negotiations and asserts that the outcome depends upon the relative bargaining power and skill the two parties bring into negotiations. Agapos and Dunlap [1] assert that the bilateral monopoly framework is not appropriate. Their analysis suggests that the profit outcome will depend (all other things being equal) on: a) how anxious a contractor is to participate in a program relative to how anxious the government agency is to have the program executed,' and b) the relative qualities of the information available to each potential contractor and the government concerning the maximum concessions each party is willing to make. These approaches all suggest that the profit outcome is determined by the relative bargaining strengths (eagerness, informa-

Methods for Resolving Differences of Interest: A Theoretical Analysis1

Four methods are described for pursuing and resolving differences of interest in a dyad: bargaining, reliance on content‐specific norms, reliance on equity norms, and reliance on the norm of mutual responsiveness. Bargaining entails a number of dilemmas and other problems that are largely avoided when dyads rely on norms. Reliance on content‐specific and equity norms poses other problems that are avoided by mutual responsiveness. A theory of changing patterns in the use of these methods is advanced. The theory holds that (a) content‐specific norms give way to the norm of mutual responsiveness in crises produced by changing needs, and (b) reliance on mutual responsiveness is replaced by bargaining in crises resulting from changes in the relative bargaining strength or capacity to be generous of the two members of the dyad, as perceived by one or both members. A revised norm of mutual responsiveness can be constructed in the latter kind of crisis provided the members of the dyad develop a consensus about their relative bargaining strength, feel dependent on one another, and have a minimal level of trust in one another.

Collective Bargaining in the Motor Freight Industry

The specific objective of this study is to evaluate the relative bargaining strength of labor and management in the motor freight cartier industry. Relative bargaining strength implies more than the degree of organization existing on both sides; in this instance, bargaining strength is also a function of the unique features of the motor freight carrier industry, such as the degree of government regulation, internal and external competitive position, internal structure and economics, and the characteristics of the major union involved. The collective bargaining relationship in any industry always functions within the framework of existing economic and political conditions. Thus, if significant changes should occur in the general price level, the labor market, or basic labor legislation, the relative collective bargaining strength would be vitally affected. For purposes of this study, the current economic and political conditions are assumed. Traditionally, it has been generally accepted that employers in almost all instances, enjoyed the dominant position in the collective bargaining relationship. More recently, unions have achieved a greater parity in bargaining power in certain industries. This study suggests that a complex of internal and external organizational and economic factors results in a bargaining relationship in which the union is the dominant power. This article will be limited largely to a discussion of relative bargaining strength involving Class I motor freight carriers, drawing heavily upon the experiences of the Central region. The Central region employs approximately 31% of the total employees in the industry and handles approximately 30% of the total freight tonnage. (Author's abstract courtesy EBSCO.)