Bargaining Delegation in Monopoly
We study eciency and distributional implications of bargaining in a monopoly, where the shareholders and the workers delegate the task of bargaining to a manager and a union leader respectively. Bargaining delegation leads to underproduction caus- ing the organizational pie to contract severely rendering mutual gains from delegation impossible. With an increase in the union's bargaining power prot may rise and the union's utility may fall. This suggests that delegation can compensate for weaker bar- gaining power. Further, numerical examples conrm that if the shareholders and the workers had a choice over delegation, they would indeed choose to delegate, on some occasions giving rise to a Prisoners' Dilemma problem.
Year of publication: |
2013
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Authors: | Chatterjee, Ishita ; Saha, Bibhas |
Institutions: | Department of Economics, Business School |
Saved in:
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