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 Özal Üniversitesi et Centre d'Economie de la Sorbonne, http://centredeconomiesorbonne.univ-paris1.fr

Documents de travail du Centre d'Economie de la Sorbonne from Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne

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: Union; firm bargaining; varying discount rates; subgame perfect equilibrium; inefficient equilibria; strike; lockouts (search for similar items in EconPapers)
JEL-codes: C78 J52 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2014-09
New Economics Papers: this item is included in nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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ftp://mse.univ-paris1.fr/pub/mse/CES2014/14073.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:mse:cesdoc:14073

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