Decentralized union-oligopoly bargaining when wages signal strength

This paper analyzes decentralized wage bargaining in a unionized oligopoly industry. The novel features of the proposed model are that firms are subject to incomplete information concerning their cost and that wages may signal firms’ private information. The potential for signaling exerts an upward shift on the equilibrium wage profile which mitigates the externality that has been shown to weaken unions’ bargaining power in decentralized wage bargaining. Copyright Springer-Verlag Wien 2015