Multifirm unions and the incentive to adopt pattern bargaining in oligopoly

Dobson, Paul

doi:10.1016/0014-2921(94)90007-8

Cited by 65 publications

(61 citation statements)

References 17 publications

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“…To give just a few examples, Milliou and Petrakis (2007) study the incentives for upstream mergers when firms can also choose the contract type (linear vs. two-part input prices) in a model in which the input price is set via Nash bargaining with Observable breakdowns. Both Marshall and Merlo (2004) and Dobson (1994) analyze pattern bargaining in linear wages using the case of Observable breakdowns. In a model with Unobservable breakdowns, Gal-Or and study merger incentives in the media industry, where media stations bargain with producers over (linear) advertising rates.…”

Section: Related Literature and Contributionmentioning

confidence: 99%

Vertical Bargaining and Countervailing Power

Iozzi

Valletti

2014

American Economic Journal: Microeconomics

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We study a set of bilateral Nash bargaining problems between an upstream input supplier and several differentiated but competing retailers. If The question of how input prices (including wages) are set is subtle. In most retail markets, consumers are atomistic and, thus, reasonably modeled as price takers when patronizing a particular seller. It is less clear who sets the input price in vertically-related markets. In particular, in "tight" oligopolies with a few upstream and a few downstream firms, a framework of bilateral negotiations, with individually-negotiated input prices, seems appropriate. 1 An extensive theoretical literature, both in Industrial Organization and in Labor Economics, has employed Nash axiomatic bargaining to model this setting. IO empirical work often uses structural models that are based on Nash bargaining. It is well known that, in a Nash bargain, the outside option impacts the bargained outcome. The same outside option, however, can be modeled in different ways, depending on the remaining players' behavior in the event of a disagreement. The purpose of this work is to study how the model of the outside option affects the outcome of the negotiation.We make a general methodological point that applies to Nash bargaining in vertically-related markets with downstream competition, when one firm is engaged in multiple negotiations. The simplest setting would involve one upstream firm and two downstream competitors. Indeed, this is the setting analyzed by the seminal work of Horn and Wolinsky (1988, henceforth HW).

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Section: Related Literature and Contributionmentioning

confidence: 99%

Vertical Bargaining and Countervailing Power

Iozzi

Valletti

2014

American Economic Journal: Microeconomics

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Vertical Bargaining and Countervailing Power

Iozzi

Valletti

2010

SSRN Journal

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We study the existence of countervailing buyer power in a vertical industry where the input price is set via Nash bargainings between one upstream supplier and many differentiated but competing retailers. In case one bilateral bargaining fails, the supplier still has the ability to sell to the other retailers. We show that the capacity of these other retailers to react in the final market has a dramatic impact on the supplier's outside options and, ultimately, on input prices and welfare. Under downstream quantity competition, we find either no or opposite support to the hypothesis of countervailing power on input prices, as the retail industry becomes more concentrated. With price competition, we find a case for countervailing power, but its existence depends on the degree of product differentiation and on the ability of competing retailers to react to a disagreement. JEL Numbers: L50

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“…Authors such as Davidson (1988), Horn and Wolinsky (1988a,b), Dowrick (1989), Bárcena-Ruiz and Garzón (2002), Petrakis andVlassis (2000, 2004), Lommerud, Straume, and Sørgard (2005), Kraft (2006), Mukherjee (2010), Symeonidis (2008Symeonidis ( , 2010, Mukherjee and Pennings (2011) and Fanti and Gori (2013) have examined the outcomes of different wage bargaining structures in oligopolies. De Fraja (1993), Dobson (1994) and Banerji (2002) further extend the analysis of sequential wage bargaining in unionized oligopolies. At the firm level, however, a distinction among plant and company-wide agreements should be done.…”

Section: Introductionmentioning

confidence: 99%

(Local) Wage Settings and (International) Entry Deterrence

Buccella¹

2017

Prague Economic Papers

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The present paper investigates the use of national wage settings as a mechanism to deter entry via foreign direct investment (FDI) in a unionized monopoly industry. A union which sets centralized wages in a multi-unit firm can both decentralize and change the agenda to prevent the market entry of a non-unionized firm. The adoption of the efficient bargaining agenda is especially effective to deter entry because it lowers the fixed-cost threshold the entrant can bear. Moreover, through side-payments, the incumbent and the union can have common interests in modifying the wage setting to reach outcomes that is Pareto-superior to duopoly. However, if the union cedes "too much power" and becomes "too weak", internal conflicts with the incumbent firm may arise.JEL Classification: J51, L13, L22

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Multifirm unions and the incentive to adopt pattern bargaining in oligopoly

Cited by 65 publications

References 17 publications

Vertical Bargaining and Countervailing Power

Vertical Bargaining and Countervailing Power

Vertical Bargaining and Countervailing Power

(Local) Wage Settings and (International) Entry Deterrence

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