Essays on bargaining power
Heidhues, Paul Franz
Doctor of Philosophy thesis
This thesis contains three essays in which the formation of coalitions affects players' bargaining power in input markets. The first essay considers two independent bilateral monopoly markets. It shows that integrating two players on the same side of these independent bilateral monopoly markets may increase their bargaining power. The exposition focuses on multiple cable system operators, which may have a bargaining advantage over unintegrated cable system operators when negotiating with broadcasters. The second essay extends the bargaining theory developed in the first essay to multiple (interconnected) bilateral negotiations between producers and distributors. Using a bargaining theoretic framework, it studies the effects of integration among local distributors on the incentives for producers' entry. The essay shows that concentration in the distributor industry may increase distributors' bargaining power vis-a-vis producers and thereby reduce incentives for producers to enter the upstream industry. The third essay investigates the effects of coalition formation across two bilateral negotiations in which the downstream players compete with each other on the product market. As an illustrative example, it analyzes the effects of industry unions and employers' associations in a duopolistic industry. Using an "efficient bargaining" model, it shows that industry unions can enforce monopolistic product market outcomes---regardless of whether bargaining is centralized or not. In response to an industry union, firms form an employers' association to increase their bargaining power and this may further reduce welfare.
Economics; Labor economics; Economic theory; Mass communication