Relative Bargaining Research Articles

Agribusiness Management and Food Marketing: Discussion

Certainly there is no more interesting topic from an industry economist's perspective than the evolution of the bargaining relationship between food manufacturers and retailers. This relationship is of crucial importanceit influences the relative profitability of food manufacturers and retailers, consumer prices, and thousands of jobs and millions of dollars in capital investment. Hamm and Grinnell do a good job of describing some of the recent developments in the food industry that influence the bargaining relationship between food manufacturers and retailers. Importantly, they forecast that bargaining power will shift more to food retailers in the coming years. This prediction is broader than, but similar to, that presented by Williams in a 1981 white paper prepared for the Office of Policy Planning of the Federal Trade Commission. In my comments I would like to do two things. First, although I do not necessarily disagree with the forecast made by Hamm and Grinnell, I do feel that there are other feasible scenarios which may evolve in the industry.1 These should be discussed to highlight the degree of uncertainty underlying the Hamm and Grinnell forecast. I will describe one alternative which I think has a nonzero probability of occurrence. My second objective is to identify areas of additional research needs in the context of food manufacturing and retailing bargaining relationships.

The Relationship of Academic Bargaining to Changes in Campus Climate

The Relationship of Academic Bargaining to Changes in Campus Climate

Strikes as a Result of Imperfect Information

This paper proposes a model of the bargaining process that recognizes that negotiators have only imperfect information at their command. The author argues that the probability of a strike occurring will increase if one party bases its perception of the opponent's position on the same variables employed to form its own position, when the opponent's position is, in fact, based on different variables. Strike probability is therefore assumed to be related to movements in variables of interest to only one side. The model is tested on a sample of fourteen bargaining relationships drawn from the series Wage Chronology, published by the Bureau of Labor Statistics, which details settlements between particular firms and unions over a period of about thirty years. Estimates of strike probability are derived from the maximum-likelihood logit procedure. The findings suggest that although both relative and absolute wage increases in a firm have a negative effect on strike frequency, relative changes are more important. In addition, factors that tend to reduce the potential that the parties will misperceive the positions of one another also reduce the probability of a strike occurring. The analysis shows, for example, that strikes are less likely to occur in bargaining relationships whose agreements follow patterns. Finally, after controlling for fixed effects, the author finds that a strike is less likely to occur if one had taken place at the time of the previous negotiation, indicating that the strike serves a learning process for the parties.

Wage Determination and Efficiency in Search Equilibrium

The concept of a competitive market is a major tool in the analysis of economists. In the simplest version of a market, resource allocation responds instantly to changes in parameters, leaving no room for frictional unemployment. One response to the unreality of this implication has been to introduce spatially distinct markets, with unemployment as workers move between markets. As modeled by Lucas and Prescott (1974), workers who are not moving are not unemployed. An alternative response is contained in the sizeable fixed price equilibrium literature, where it is assumed that prices do not change to clear markets in the short run. In contrast, the conceptual starting place of this analysis is to drop the idea of a market. Rather than markets being the mechanism by which workers and jobs are brought together, it is assumed that there is a search process which stochastically brings together unemployed workers and vacant jobs pairwise. It is taken as axiomatic that the process takes time and so involves foregone output. It is assumed that a worker and a job brought together by the search process negotiate a wage, with instantaneous negotiation. Thus, the only frictions in the model are in the search process, with wages flexible. Actual search and negotiation processes are complicated and would be difficult to model in detail. Here we make numerous simplifying assumptions to permit explicit solution of equilibrium variables and easy analysis of their efficiency properties. The focus of the analysis is the efficiency of the incentive to enter the labour market. That is, we compare the lifetime expected present discounted value of earnings of a new worker with the social marginal product of that worker. The comparison depends critically on the bargaining solution and on the nature of the search technology. Generally, equilibrium is not efficient because of search externalities. The sources of the externalities are easy to see. The presence of an additional worker makes it easier for vacancies to find workers and harder for other workers to find jobs. The wage negotiation, however, reflects the relative bargaining powers of workers and jobs. Only in special cases will the balance of bargaining powers result in a wage which reflects the balance of search externalities as well as the value of output directly produced. The analysis identifies cases where the incentive for entry is too large or too small. This efficiency analysis complements other efficiency analyses of search intensity, job-quitting, and job-taking (Diamond (1981), Diamond and Maskin (1979, 1981), and Mortensen (1979, 1981)). These latter papers have considered markets with equal numbers of jobs and workers. This paper focuses on the implications of unequal numbers

A class of solutions to bargaining problems

A reformation of Nash's axiom of Independence of Irrelevant Alternatives is proposed, generalizing an idea due to Roth. It involves the concept of a reference function g, whose purpose is to summarize the main features of the bargaining problem and so facilitate the evaluation of the relative bargaining positions of the players. It is with respect to g that the Independence condition is reformulated. In conjunction with the other axioms used by Nash, it is shown that if g satisfies certain natural properties, the bargaining problem admits of a unique solution. Several examples of reference functions are shown to satisfy these conditions. An existence problem discovered by Roth for a particular choice of g is shown to be resolved if solutions are permitted to be multi-valued, the axioms being correspondingly reformulated.

A MODEL OF THE PUBLIC SECTOR WAGE DETERMINATION PROCESS--WITH SPECIAL REFERENCE TO INSTITUTIONAL FACTORS

Once the analysis is brought to this level, such overarching factors as the economic pressures of alternative wages and the institutional/legal constraints governing development of the formal bargaining relationship may be introduced as limitations on the parties’ latitude in reaching agreements. This chapter describes the public sector wage determination process to show how certain factors close to the collective bargaining process itself affect the behavior of the participants and the outcomes of negotiations. Bargaining units may be broad or narrow in terms of the different kinds of employees included in them. Several fragmented bargaining units, for instance, may enable public employees to engage in a pattern of “leapfrogging” wage adjustments over each other. The organizational structure of the public employer has important consequences for wage determination. For example, the motives of staff in the organizational subunit responsible for carrying out negotiations will affect their stands at the bargaining table.

Labor and hegemony: a reply

When I wrote “Labor and hegemony,” I anticipated two kinds of critical reaction: one on the ground that the method and approach was at variance with mainstream political science; the other in defense of two institutional establishments whose ideological foundations were challenged in the article— those of the ILO and the AFL-CIO. Both these organizational establishments place great stock in the idea of tripartism, representing it as a form of pluralism or a bargaining relationship of independent actors—unions, employers, and government. In “Labor and hegemony,” I argued that this appearance of independence has to be understood as the ideological expression of a particular structure of social power, a particular form of hegemony that is found in advanced capitalist societies with the emergence of a corporative form of state. This blocco storico is the proper object of study, and since it has international as well as national dimensions its study can be a fruitful approach to international affairs and international organization.

Agenda Setting and Bargaining Power: The Mexican State Versus Transnational Automobile Corporations

The authors explore the often conflictual bargaining relations between transnational corporations and host governments of less developed countries. They focus particular attention on the conflict that surrounded the creation of the Mexican automobile industry (1960–1964), criticizing and reformulating a current approach to these issues. The argument proceeds in two parts—agenda setting and bargaining power. Each part is organized around a central criticism of the bargaining power approach and provides an alternative formulation which is then applied to an analysis of the bargaining relationship between the Mexican Government and the transnational automobile corporations.

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.

Statutory Definitions of the Scope of Negotiations: The Implications for Traditional Faculty Governance

By entering into collective bargaining relationships, faculty have introduced environmental influences heretofore not present in the decision-making processes of higher education. In almost all instances faculty bargaining units emerged after either the passage (public sector) or expansion of jurisdiction (private sector) of legislation permitting collective bargaining.1 The various public or private bargaining statutes have the potential to alter traditional governance mechanisms through the interpretation of the statutory scope of negotiations obligations either by agencies set up to administer the laws (for example, the National Labor Relations Board) or by the courts. A number of publications have reported on the impact of collective bargaining on traditional governance, but no published reports have singled out the effects contributed by the interpretation of collective bargaining statutes in respect to what is negotiable with faculty unions.2

Asymmetrical bargaining in the conference on security and cooperation in Europe

Bargaining relationships in formal international conferences and negotiations may involve structural asymmetries. A comprehensive analysis of these asymmetries in bargaining may be found in a synthesis of literature from formal game theory, structural-manipulative approaches to bargaining, social psychology, and the study of political influence. Propositions based on this literature focus on two factors which are likely to contribute to asymmetrical outcomes in negotiations: unequal costs to the negotiators from the failure to agree, and unequal resources available to employ in bargaining or influence attempts. An analysis of bargaining in the section of the Conference on Security and Cooperation in Europe (CSCE) dealing with the issues of European security gave qualified support to these propositions. Influence over the final text in the CSCE agreement is related to a rough index of losses which would have resulted for individual nations from the failure to reach agreement in the CSCE. In addition, influence over the final text is related to each nation's resources, especially military resources. More significantly, the two superpowers exerted considerable asymmetrical influence over what was not included in the CSCE agreement, thus exercising a substantial veto. Thus, the asymmetrical outcomes within the CSCE negotiations were reflective of both differences in “threat potential,” that is, in the losses which actors would receive if no agreement had ensued, as well as differences in resources.

Bargaining in distribution channels

This study empirically assesses the impact two fundamental dimensions of distribution channels have on channel member bargaining behavior, namely, (1) the expected duration of the channel bargaining relationship and (2) the channel member dependence on the bargaining. The following findings were observed from a laboratory study using 160 business students: low dependence produced fewer bargaining sessions ending in agreement compared to high dependence among buyer-seller dyads. Low dependence bargainers made more extreme initial offers, conceded less, and used the pronoun we less than did high dependence bargainers. The sellers emerged better off than the buyers from the negotiations. Sellers achieved this advantage by making more extreme initial offers than buyers, conceding more than buyers, but emerging with the better deal.

The 1976 Budgets: A Shift toward Restraint

indefinite future period, it is hard to see how the country can avoid this process of working out the distortions. Moderate monetary and fiscal restraint, of the variety now being applied, may be able to bring us close to the four per cent target by 1978 without causing unbearable unemployment or idle capital. If so, we may expect that the Government will progressively relax the restraints under the AntiInflation Act, while retaining the Act itself, in order to permit an orderly return to market-determined bargaining relationships in the private sector. SJudith Maxwell

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.

Collective Bargaining for University Faculty: A Legal Perspective

Present signs indicate that university faculty are moving slowly, but inexorably, along the road to collective bargaining. Faculty in Quebec appear to be in the vanguard of this movement, but there are signs that faculty in other provinces are following in the same direction. To many, this may be an alarming development, giving rise to a number of fears, such as union organizers disrupting collegial relationships; a closed shop being imposed upon the university community; a highly formalized employment relationship replacing the traditional university-faculty relationship; union solidarity replacing academic excellence; the strike and picket line replacing rational discussion; and government and union interference in the administration of the universities. Such developments would indeed be undesirable, but I submit that they do not necessarily flow from collective bargaining and the present legal structure established to regulate it. To support this statement, it is necessary to describe the more significant features of the existing legal structure regulating collective bargaining. This structure is characterized by 1) positive legal support to encourage employees to organize into collectives with the purpose of providing a countervailing force to match the economic power of the employer; 2) strict limits on the use of economic sanctions by either employees or employers; and 3) a reluctance to interfere in those situations where employers and employees are able to establish a harmonious collective bargaining relationship. Since each of these features plays a key role in shaping our collective bargaining system, further explanation is needed. A primary purpose of existing collective bargaining legislation is to encourage the organization of employees into collectives for the purpose of bargaining with employers. One method of legal assistance is for labour relations legislation to prohibit certain types of employer conduct, including employer statements, that interfere with employee organizations. Perhaps of even greater assistance to trade unions is the status conferred by law where the union has organized a majority of employees in a particular constituency, called the bargaining unit. This status, acquired through a procedure called certification, gives the union exclusive authority to bargain for all employees in the bargaining unit, even though some of these employees may not be members of the union. The law supports this status by prohibiting the employer from bargaining with any other person or organization. The result is that the law gives a seat at the bargaining table to a union that becomes certified as bargaining agent, whether the employer likes it or not. Bargaining status, however, does not carry with it the right to strike at all times. In fact, existing legislation strictly curtails the right to resort to economic sanctions. Labour legisla-

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-

Some empirical results concerning the modelling of industrial distribution systems : Atkins DR (1972) PhD. thesis, University Library, School of Industrial and Business Studies, Warwick University, Coventry CV4 7AL, England

This research thesis aims to add to the understanding of industrial distribution systems and to develop our ability to model such systems. The work is empirically based, taking a particular distribution system, studying it in depth and observing it during a period of change and reorganisation. The thesis is also part of a wider research programme to investigate the problems of applying Operation Research to decision making in unstable environments. Change in distribution systems often provides good examples of this form of decision making, and some tentative generalisations are drawn as a contribution to this wider programme. Empirical research into either distribution systems or decision making in unstable environments poses the problem of access. A characteristic of this form of decision making is its informality, without the usual stress on committees and reports found with more formal long range planning. In order to ensure access to the real decision making process the researcher became an indispensable part of that process. The research method adopted was of a type since become known as the dual researcher/change agent type. With this method the researcher had the two responsibilities of solving the particular problem while recording material as objectively as possible for research analysis. Hence a subobjective of the research programme was a project to diagnose and cure a problem arising in the distributive system under study. To do this two models were developed. Firstly a channel choice model which summarised the economic variables of the distributive system. By exploiting a particular structure inherent in the model, this could be recast into a form similar to the classical transportation algorithm. As the cost matrix was of a predominantly block-diagonal form an extended application of the saddle- point theorem allowed an efficient' dual decomposition procedure to be developed. The second model relied on attitudinal data, and attempted to model merchants’ behaviour in terms of how they construed their role in the distributive system and of the pressures placed upon them through the bargaining relationship. These models were used in tandem, the first demonstrating the ideal channel choice configuration from. the manufacturer's point of view, the second showing what could feasibly be achieved in spite of the power structure maintained by the merchants.

Factors affecting the magnitude of subjective utility parameters in a tacit bargaining game

Eighty male and female high school students played a modified version of the Siegel and Fouraker (1960) bilateral monopoly game, designed to assess the effects of two variables upon the development of aspiration level (AL), comparison level (CL), and comparison level for alternatives (CL nlt), and the interrelationships among these three subjective-utility parameters. Magnitude of: (a) the offers made by a programmed bargaining opponent (high vs low), and (b) the alternative to the bargaining relationship (high vs low) was varied in a 2 × 2 design. Subjects receiving high offers bargained tougher, rated themselves as more satisfied with their outcomes and, in support of the hypothesis, set their AL, CL, and CL alt estimates higher than those receiving low offers. Contrary to expectation, however, AL, CL, and CL alt were set highest by subjects in the “high offer-low alternative” condition. When subjects' three subjective-utility estimates were considered in relation to one another, all condition differences disappeared. These latter findings were interpreted using notions drawn from Upshaw's (1969) variable perspective theory of judgment.

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.

The nature and success of influence attempts in a four-party bargaining relationship

The functioning of a complex four-party bargaining system was subjected to experimental analysis. Two of the bargaining parties, A and B, were defined as having equal power, this power being greater than that of A and B's respective “allies”, X and Y—who also had equal power. The bargaining system was further structured so as to make it desirable for A and B to interact indirectly with each other, via X and Y as intermediaries. Within this paradigm, A and B's relationship with each other (cooperative vs competitive) and X and Y's counterpower vis-à-vis A and B (high vs low) were manipulated in a 2 × 2 factorial design. It was found, as predicted, that the system functioned most effectively (in terms of outcome levels and degree of positive affect among the four parties) when A and B were cooperatively oriented, and X and Y had low counter-power. The system functioned least effectively when A and B were competitive and their “allies'” counterpower was high. On the other hand, a number of unexpected findings emerged with respect to the kinds of influence attempts directed by A and B at X and Y. Among the more provocative of these was the fact that cooperative A and B's, in contrast with those receiving a competitive induction, made the most frequent use not only of promises but threats as well.