The Effect of Changes in Wage Orientation and Bargaining Power on Union Wages and Profits

Peter Sanfey

Studies in Economics from School of Economics, University of Kent

Abstract: This note uses a simple, Nash-bargaining model between a union and a firm to analyze the effect on wages and profits of a simultaneous change in the union's relative preference for wages over employment, and in its bargaining power. It is shown that, if there is efficient bargaining, a rise in the union's wage orientation combined with a fall in power can lead to an increase in both wages and profits.

Keywords: Trade Unions; Bargaining Power (search for similar items in EconPapers)
JEL-codes: J51 (search for similar items in EconPapers)
Date: 1996-03
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