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Consider a non-strategic game between a firm and its union.The value to the firm of getting the workers back to work is $5 million.The union's agreement value to get back to work is $5 million.The firm can hire nonunion workers,"scabs",so their disagreement value is 1 million and the union members can find temporary employment elsewhere,making the unions disagreement value $2million.
-The firm would have a better bargaining position if

Question

​Use the following setup for question
Consider a non-strategic game between a firm and its union.The value to the firm of getting the workers back to work is $5 million.The union's agreement value to get back to work is $5 million.The firm can hire nonunion workers,"scabs",so their disagreement value is 1 million and the union members can find temporary employment elsewhere,making the unions disagreement value $2million.
-​The firm would have a better bargaining position if

Quizplus · Accepted Answer

If the firm can easily replace the workers with machinery (A) or if the workers are highly specialized and would not find employment elsewhere easily (C), then the firm has more bargaining power in the negotiation with the union. In both cases, the firm has alternatives to meet its production needs without depending on the union workers, which weakens the union's negotiating position. Therefore, both options A and C give the firm a better bargaining position.

​Use the Following Setup for Question

Use the Following Setup for Question