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Bargaining Delegation in Monopoly

Author

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  • Ishita Chatterjee

    (Business School, University of Western Australia)

  • Bibhas Saha

    (University of East Anglia)

Abstract

We study eciency and distributional implications of bargaining in a monopoly, where the shareholders and the workers delegate the task of bargaining to a manager and a union leader respectively. Bargaining delegation leads to underproduction caus- ing the organizational pie to contract severely rendering mutual gains from delegation impossible. With an increase in the union's bargaining power pro t may rise and the union's utility may fall. This suggests that delegation can compensate for weaker bar- gaining power. Further, numerical examples con rm that if the shareholders and the workers had a choice over delegation, they would indeed choose to delegate, on some occasions giving rise to a Prisoners' Dilemma problem.

Suggested Citation

  • Ishita Chatterjee & Bibhas Saha, 2013. "Bargaining Delegation in Monopoly," Economics Discussion / Working Papers 13-09, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:13-09
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    File URL: https://www.business.uwa.edu.au/__data/assets/pdf_file/0009/2267172/13-09-Bargaining-Delegation-in-Monopoly-.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Chatterjee, Ishita & Saha, Bibhas, 2013. "Bilateral delegation in wage and employment bargaining in monopoly," Economics Letters, Elsevier, vol. 120(2), pages 280-283.
    2. António Brandão & Joana Pinho, 2018. "Productivity Shocks in a Union‐Duopoly Model," Manchester School, University of Manchester, vol. 86(6), pages 722-756, December.

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