NASH BARGAINING AND CO-OPERATIVES

This paper develops the generalised Nash bargaining solution for a bargaining co-operative selling its output to a single buyer. Three assumptions for co-operative members' behaviour are examined: profit maximisation, co-operative surplus maximisation and maximising members' price. Solutions are compared and comparative statics presented for these alternative assumptions and the bargaining over price and quantity transacted. The most striking feature of the results is that pursuing the objective of maximising members' price does not necessarily lead to the highest members' price     

BARGAINING FAILURES AND MERGER POLICY

We study approval rules in a model where horizontal merger proposals arise endogenously as the outcome of negotiations among the firms in the industry. We make two main points. First, relatively inefficient merger proposals succeed with positive probability. That is, the negotiation process may result in a particular merger agreement despite the existence of an alternative one that would generate higher profits and higher consumer surplus. Second, the antitrust authority should optimally commit to an approval rule that is more stringent for all mergers than the optimal ex post rule.     

WAGE BARGAINING WITH A PRICE-SETTING FIRM

This paper examines the introduction of monopolistic competition into wage bargaining models: in addition to capital-labour substitution, we also consider a cost-push effect. The right-to-manage model requires strong restrictions on the objective functions and leads to problematic conclusions because the wage claims of the union are generally not compatible with the mark-up requirement contained in the firm's price equation. In the efficient bargaining model, the union negotiates also the employment level, which gives it a way of extracting part of the monopoly rent: the firm's commitment to an efficient wage-employment combination forces it to follow a pricing rule such that part of the surplus is transferred to the union.     

FEE VERSUS ROYALTY POLICY IN LICENSING THROUGH BARGAINING: AN APPLICATION OF THE NASH BARGAINING SOLUTION

In this paper, we consider a Cournot duopoly market in which the patent‐holding firm negotiates with its rival firm about payments for licensing a cost‐reducing innovation. Applying the Nash bargaining solution, we compare two licensing policies, a fixed fee and a royalty. Our results are as follows. Royalty licensing is better than fixed fee licensing for both firms if the innovation is not drastic. So, royalty licensing is always carried out. Moreover, though there exists a case in which consumers prefer fixed fee licensing, royalty licensing is always superior to fixed fee licensing from the social point of view.     

PUBLIC SECTOR AND WHITE COLLAR BARGAINING

White-collar workers have come to occupy a strategic place in both the economic and the institutional working of the labour market.…     

SUBSIDIZATION AND BARGAINING IN MIXED OLIGOPOLIES

In this paper, we consider political interaction in a mixed oligopoly by characterizing how a subsidy is endogenously determined through the bargaining process between firms and politicians. We discuss how the nature of the political equilibrium changes with the type of competition, the specification of the cost function, and the timing of the game. We show that when bargaining between firms and politicians takes place, the resulting social welfare may be even worse than that under a public firm monopoly.     

EFFICIENCY OF WAGE BARGAINING WITH ON-THE-JOB SEARCH

This article studies efficiency in a general class of search models where both unemployed and employed workers search for better jobs and can meet multiple firms simultaneously. Employers can respond to outside offers and wages are a weighted average of the productivities of the current employer and a credible poaching firm. I derive a condition that balances firms' bargaining power and their meeting externality. This condition ensures efficiency of both worker turnover and firm entry. Finally, the efficiency condition unifies and extends many of the results on the efficiency of equilibrium search models.     

COMMITMENT AND COSTLY SIGNALING IN DECENTRALIZED MARKETS

I propose a search model of a decentralized market with asymmetric information in which sellers are unable to commit to asking prices announced ex ante. Relaxing the commitment assumption prevents sellers from using price posting as a signaling device to direct buyers' search. Private information about the gains from trade and inefficient entry on the demand side then contribute to market illiquidity. Endogenous sorting among costly marketing platforms can facilitate the search process by segmenting the market to alleviate information frictions. Seemingly irrelevant but incentive compatible listing fees are implementable provided that the market is not already sufficiently active.     

ON MAJORITARIAN BARGAINING WITH INCOMPLETE INFORMATION*

This article studies a finite horizon version of Baron and Ferejohn's (American Political Science Review 83 (1989), 1181–206) majoritarian bargaining with incomplete information. Of many findings, we show that (i) allowing for delay can be optimal for a proposer; (ii) the revelation of a type depends on two conflicting concerns, the “offer” concern à la Spence's signaling (the higher the type the better) and the “coalition inclusion” concern in a majority consent (the lower the type the better); and (iii) players take actions to distinguish themselves via delay, but separating equilibria often fail to exist due to incapability or unprofitability of exercising delay.     

WAGE AND EMPLOYMENT DETERMINATION THROUGH NON-COOPERATIVE BARGAINING

This paper investigates wage and employment determination by a group of workers or union and a firm, making use of the techniques of non-cooperative bargaining. Previous analyses have examined wage determination with an artificial restriction that employment is determined either before or after wage determination has occurred. Here, employment determination is made part of the bargaining process. With two variables being determined, there is bargaining with a variable pie and solutions correspond to equilibria without commitment. Two different notions of efficiency – exchange and pie efficiency – are relevant and serve to characterise equilibria. Multiple equilibria are shown to arise naturally once exchange inefficient proposals are possible. In all equilibria there is overemployment. Factors that restrict a firm's ability to alter the labour force during or after the wage-bargaining process are shown, paradoxically, to benefit the firm.     

DECENTRALIZED TRADE MITIGATES THE LEMONS PROBLEM*

In markets with adverse selection, only low‐quality units trade in the competitive equilibrium when the average quality of the good held by sellers is low. We show that under decentralized trade, however, both high‐ and low‐quality units trade, although with delay. Moreover, when frictions are small, the surplus realized is greater than the (static) competitive surplus. Thus, decentralized trade mitigates the lemons problem. Remarkably, payoffs are competitive as frictions vanish, even though both high‐ and low‐quality units continue to trade, and there is trade at several prices.     

WAGE BARGAINING AND MERGER INCENTIVES WITH ASYMMETRIC COSTS

This paper examines how wage bargaining within each firm influences the relationship between an equilibrium ownership structure and the most preferred ownership structure from the viewpoint of social welfare, in a unionized oligopoly of asymmetric firms with respect to productivity of capital. We consider the merger incentive of each firm’s owner when the wage level is determined through bargaining between the firm’s owner and union. We derive a condition for both the degree of cost asymmetry among existing firms and the relative bargaining power of each firm’s owner to her/his union such that each ownership structure can be observed in equilibrium. We also show that although the two types of ownership structures with the merger involving the least efficient firm can be equilibria and socially optimal, these structures are observed only when both the degree of cost asymmetry and the relative bargaining power of each firm’s owner are moderate. Finally, we analyse the relationship among the cooperative game approach employed in this paper and two non‐cooperative merger formation approaches, and examine the robustness of the results obtained in this paper against the change in the assumption regarding each firm’s cost function.     

UNIONS' RELATIVE CONCERNS AND STRIKES IN WAGE BARGAINING

We consider a model of wage determination with private information in an oligopoly. We investigate the effects of unions having relative concerns on the negotiated wage and the strike activity. We show that an increase of unions’ relative concerns has an ambiguous effect on the strike activity.