Bilateral Delegation in Duopoly Wage and Employment Bargaining

Ishita Chatterjee, Bibhas Saha

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

We study bilateral delegation in wage and employment bargaining between firms and unions in a Cournot duopoly. Incentive delegation creates frictions for each party between its objectives of within-firm rent extraction and market/job stealing from the rival firm. The net effect is restraint in production, resulting in a larger bargaining pie. But each player's payoff will be inversely related to his bargaining power. We also show that if players are given a choice to delegate, they will not resort to delegation when their bargaining power is sufficiently high. This is in contrast to the scenarios commonly assumed in many models.
Original languageEnglish
Pages (from-to)607-621
JournalManagerial and Decision Economics
Volume38
Issue number4
Early online date27 May 2016
DOIs
Publication statusPublished - Jun 2017

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