Are Nash Bargaining Wage Agreements Unique? An Investigation into Bargaining Sets for Firm-Union Negotiations

Carol Alexander and W Ledermann

Oxford Economic Papers, 1996, vol. 48, issue 2, 242-53

Abstract: The shapes of the bargaining sets for firm-union negotiations are rigorously analyzed in two cases, according to whether bargaining is over wages alone (with employment set according to the labor demand schedule) or over both wages and employment. When bargaining concerns wages only, the bargaining set becomes a one-dimensional curve and so the standard theory of the Nash bargaining solution does not apply. Therefore, existence and uniqueness conditions are proved directly. The Kalai-Smorodinsky solution is also analyzed and results are illustrated using a constant elasticity example. Copyright 1996 by Royal Economic Society.

Date: 1996
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