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 union would have a better bargaining position in the negotiations if
A)The firm can hire individual workers at a lower wage
B)The union has low wage workers who cannot afford to be off work
C)The union has a strike fund to pay workers during work stoppage actions
D)The firm can easily replace workers with machinery

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 union would have a better bargaining position in the negotiations if
A)​The firm can hire individual workers at a lower wage
B)The union has low wage workers who cannot afford to be off work
C)The union has a strike fund to pay workers during work stoppage actions
D)​The firm can easily replace workers with machinery

Quizplus · Accepted Answer

With a strike fund, the union can sustain its workers during the work stoppage and thus increase their disagreement value (from $2 million without strike fund to potentially higher with strike fund). This would put the union in a better bargaining position compared to the firm, which would have to sustain a loss of $1 million by hiring nonunion workers. Other choices (A, B, D) do not directly impact the union's bargaining position in negotiations.

​Use the Following Setup for Question

Use the Following Setup for Question