Union Formation and Bargaining Rules in the Labor Market

This paper analyzes union formation in a model of bargaining between a firm and several unions. We address two questions: first, the optimal configuration of unions (their number and size) and, second, the impact of the bargaining pattern (simultaneous or sequential). For workers, grouping into several unions works as a price discrimination device which, at the same time, decreases their market power. The analysis shows that optimal union configuration depends on the rules that regulate the bargaining process (monopoly union, Nash bargaining or right to manage).Financial support from Universidad del País Vasco(9/UPV 00035.321-13560/2001) and from Ministerio de Ciencia y Tecnología (BEC 2003-02084) is gratefully acknowledged