Industrial bargaining and union bargaining type determination: A theoretical perspective

This research examines the literature of industrial bargaining. It uses general economic theory to examine union bargaining types and the effect union bargaining type has on the bargaining outcome, in terms of the wage rate and the employment level. This general theory produces a line segment on which the bargaining agreement will lie, the labour demand curve or the contract curve, dependent on bargaining type. The game theoretic approach of Nash's (1950) bargaining game is combined with this general theory to allow an exact agreement point to be established. The Nash bargaining game has been used in prior examinations of union bargaining types. Previous approaches used to identify union bargaining type are discussed, and from their limitations a new method of bargaining type identification is proposed. This new method utilises a partially specified Nash bargaining model, which has the additional benefit of allowing the suitability of the Nash framework to be assessed. 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