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The Kalai-Smorodinsky Bargaining Solution in Wage Negotiations

Carol Alexander
The Journal of the Operational Research Society
Vol. 43, No. 8, Mathematical Methods and Models in Honour of Steven Vajda (Aug., 1992), pp. 779-786
DOI: 10.2307/2583096
Stable URL: http://www.jstor.org/stable/2583096
Page Count: 8
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The Kalai-Smorodinsky Bargaining Solution in Wage Negotiations
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Abstract

This paper characterizes the Kalai-Smorodinsky bargaining solution when firms and unions negotiate over wages alone, and firms set the level of employment in order to maximize profits given the agreed wage. The Kalai-Smorodinsky solution is analysed for the case that the wage elasticity of employment and the union's risk aversion are both constant. In this case there is a simple relationship between the Kalai-Smorodinsky and the Nash solutions.

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