MULTIFIRM UNIONS AND THE INCENTIVE TO ADOPT PATTERN BARGAINING IN OLIGOPOLY

This paper develops a model of wage bargaining between an industry-wide trade union and firms in an oligopoly and considers the circumstances under which the union prefers pattern bargaining, that is negotiating contracts in a sequential manner, to simultaneous bargaining with the firms. The paper goes on to consider the importance of the bargaining order in pattern bargaining when the firms are asymmetric. The analysis shows that the union gains by first targeting a firm which is in a relatively weak bargaining position (i.e. impatient to settle) or a firm with relatively large profits.