The strategic choice of union-oligopoly bargaining agenda

This article analyzes the optimal choice of union-oligopoly bargaining agen da (i.e., Right-to-Manage versus Efficient Bargaining) under possible marke t entry. It is shown that agreement by both the union and the incumbent fir m about Efficient Bargaining emerges as equilibrium in Nash strategies, eve n more so under nan-blockaded entry for deterrence motives. This is consist ent with the common empirical findings that unionized firms do not behave a ccording to the prediction of the Right-to-Manage model that employment wil l be on the labor demand curve. The entry deterrence effect highlighted in this paper also suggests that labor market organization should not be overl ooked as a component of the welfare analysis of product market competition. (C) 1999 Elsevier Science B.V. All rights reserved.