Inefficient equilibria and lockouts in wage bargaining with discount rates varying in time

Ahmet Ozkardas () and Agnieszka Rusinowska
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Ahmet Ozkardas: Turgut Ozal University, CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: We consider a union-firm wage bargaining in which the preferences of the union and the firm are expressed by sequences of discount rates varying in time. The contribution of the paper is twofold. First, we consider a model in which the union must choose between strike and holdout in case of disagreement. We show that there exist inefficient subgame perfect equilibria in the model where the union engages in several periods of strikes prior to reaching a final agreement. Furthermore, we analyze a wage bargaining in which the firm is allowed to engage in lockouts. We consider a game in which only lockouts are feasible, i.e., strikes are not allowed. We prove that under certain assumptions there is a subgame perfect equilibrium for this game and it leads to an immediate agreement which yields the union a wage contract smaller that the statuts quo contract. Under this equilibrium the firm always locks out the union after its own offer is rejected and holds out after rejecting an offer of the union.

Keywords: varying discount rates; lockouts; strike; subgame perfect equilibrium; inefficient equilibria; union - firm bargaining; grève; « lockouts »; équilibres inefficaces; taux d'escompte variable; équilibre en sous-jeu parfait; négociation entre un syndicat et une firme (search for similar items in EconPapers)
Date: 2014-09
New Economics Papers: this item is included in nep-gth
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01113240v1
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Published in 2014

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Related works:
Working Paper: Inefficient equilibria and lockouts in wage bargaining with discount rates varying in time (2014)
Working Paper: Inefficient equilibria and lockouts in wage bargaining with discount rates varying in time (2014)
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