Prior Restrictions on Bargaining Contract Curves

It is well-known that the efficient-bargain model imposes no general restrictions on the slope of the contract curve. As a result, both upward- and downward-sloping curves are consistent with the theory. Less is known, however, about the effect on the contract curve of changes in the demand and supply variables that underlie employer and union indifference maps and help determine curve's position. To aid empirical researchers, this paper analyzes the effects of demand and supply variables on the position of the contract curve and states the minimal prior restrictions that can be placed on these effects.