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Individual and Collective Wage Bargaining

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  • Levy, Anat
  • Shapley, Lloyd S

Abstract

Wage negotiation is modeled as an oceanic game. The employer and unions (if any) are atomic players, interacting with an 'ocean' of infinitesimal individual, unorganized workers. All workers are equally productive inside the firm but may differ in their outside opportunities. The 'worth' of a coalition is its achievable surplus, and the Shapley value of the c-f game thereby defined provides a plausible, equitable wage settlement. Several different levels of unionization are investigated. It is noteworthy that this approach does not introduce specific bargaining procedures; instead (like the core) it builds on cooperative possibilities present in the economic situation itself. Copyright 1997 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

Suggested Citation

  • Levy, Anat & Shapley, Lloyd S, 1997. "Individual and Collective Wage Bargaining," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(4), pages 969-991, November.
    • Handle: RePEc:ier:iecrev:v:38:y:1997:i:4:p:969-91
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    References listed on IDEAS

    as
    1. Douglas H. Blair & David L. Crawford, 1984. "Labor Union Objectives and Collective Bargaining," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 99(3), pages 547-566.
    2. J. W. Milnor & L. S. Shapley, 1978. "Values of Large Games II: Oceanic Games," Mathematics of Operations Research, INFORMS, vol. 3(4), pages 290-307, November.
    3. Guesnerie, Roger, 1977. "Monopoly, syndicate, and shapley value: About some conjectures," Journal of Economic Theory, Elsevier, vol. 15(2), pages 235-251, August.
    4. N. Z. Shapiro & L. S. Shapley, 1978. "Values of Large Games, I: A Limit Theorem," Mathematics of Operations Research, INFORMS, vol. 3(1), pages 1-9, February.
    5. Frank, Robert H, 1984. "Are Workers Paid Their Marginal Products?," American Economic Review, American Economic Association, vol. 74(4), pages 549-571, September.
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    Cited by:

    1. Ahmet Ozkardas & Agnieszka Rusinowska, 2012. "Wage bargaining with discount rates varying in time under exogenous strike decisions," Documents de travail du Centre d'Economie de la Sorbonne 12013, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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