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Wage And Employment Determination Through Non‐Cooperative Bargaining

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  • Kevin Roberts

Abstract

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.

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  • Kevin Roberts, 2007. "Wage And Employment Determination Through Non‐Cooperative Bargaining," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 699-720, November.
    • Handle: RePEc:bla:scotjp:v:54:y:2007:i:5:p:699-720
    DOI: 10.1111/j.1467-9485.2007.00437.x
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    1. Avner Shaked & John Sutton, 1984. "The Semi-Walrasian Economy," STICERD - Theoretical Economics Paper Series 98, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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    Cited by:

    1. Asproudis, Elias & Filippiadis, Eleftherios, 2021. "Bargaining for Community Fishing Quotas," MPRA Paper 107409, University Library of Munich, Germany.
    2. Ayşe Mumcu, 2010. "Strategic Withholding Of Firm‐Specific Skills In Wage Bargaining," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(2), pages 187-211, May.

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