Endogenous scope of bargaining in a union-oligopoly model: when will firmsand unions bargain over employment?

The scope of firm-union bargaining is shown to be endogenously determined i n a union-oligopoly model with decentralized negotiations. If the unions' p ower is sufficiently high, all bargaining units choose to negotiate over wa ges alone, i.e., universal right-to-manage bargaining emerges in equilibriu m. Otherwise, wage/employment bargaining and right-to-manage bargaining coe xist in the same industry. In equilibrium, some firm-union pairs will alway s choose to bargain over employment as well, since the firms become Stackel berg leaders in the market by committing to a particular output during the negotiations. The firms and their unions both benefit from the additional S tackelberg rents, provided that the unions' power is small enough. Our anal ysis suggests that there is not necessarily a negative relationship between unions' power and sectoral employment rates. (C) 2000 Elsevier Science B.V . All rights reserved. JEL classification: J50; J53; L13.