Introduction

Bargaining and collective action interact in three main ways. First, bargaining may fail because of collective action problems that arise in the course of negotiations. To get an edge in wage bargaining, labour and management may use tactics that are individually rational but collectively disastrous. Second, decentralized bargaining may create collective action problems because the parties involved in one bargaining process fail to take account of the externalities their agreement imposes on those involved in other, simultaneously occurring processes. The members of any given union are but marginally hurt by the price increases induced by their wage demands, but an across-the-board increase harms members of all unions. Third, collective action problems may require bargaining to allocate the burdens and benefits from cooperation. If unions agree on centralized bargaining, there will be bargaining over the wage profile to present to employers. In this chapter I discuss how these problems arise in interactions between employers and unions (capital–labour bargaining), among employers (capital–capital bargaining) and among unions (labour–labour bargaining). Since my main examples, here and in Chapter 6, will be taken from Swedish collective bargaining, I also offer a brief description of that system.

First, however, I want to make some general comments on the third problem – the bargaining problems embedded in collective action. Chapter 1 proposed a simplified analysis of collective action problems, in which I assumed that the actors were homogeneous and interchangeable. Although heterogeneity is the main source of bargaining in such problems, the need to negotiate can also arise in the homogeneous case with binary choices.