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Abstract
Bargaining in agriculture is collective because an agent represents
multiple principals, the farmers, in contrast to an agent who negotiates on behalf
of a single or corporate entity. Collective bargaining adds the complication of
securing commitments from several individuals, each possibly having a slightly
different reservation value for an acceptable agreement. A disadvantage for a
collective bargaining agent may emerge when negotiating with an agent
representing a single or corporate principal rather than another collective group
of principals. Such asymmetry provides opportunities for a single agent to
exploit differences among heterogeneous principals when negotiating with a
collective agent.
The structure of California pear growers consists not only of a wide
distribution in the size of farm production, but involves a special class of very
large growers who also operate packing businesses for marketing to nonprocessed,
fresh markets. These grower-packers had gradually withdrawn from
membership in the bargaining cooperative, but they provided tacit cooperation
by refraining from taking contracts until the association concluded its
negotiations with food processors. This form of tacit cooperation provided a
credible commitment for California pear bargaining for several years, until the
system failed in 2003 under aggressive negotiating pressure from one of the fruit
processors.
Tacit cooperation between two entities involves interdependent
decisions. Such situations are frequently analyzed using game theory
techniques. The Prisoners’ Dilemma (PD) is the most famous situation of tacit
choice between cooperation and defection. But in the California pear case of
2003, the decision outcomes were asymmetrical. Interviews of the bargaining
association manager and representatives of the grower-packers included ordinal
ranking of choices and outcomes. These results produced two different game
matrices that reflect their different interpretations of the available choices and
what they believed was their counterpart’s ranking. Game theory provides a
structure for specifying choices that result in either achieving or abandoning
joint maximum gains from cooperation. Applying game theory to a historical
case study keeps the research focus on contingencies and reasons other than
irrational or behavioral limitations that lead to defection from cooperation.
Lastly, a game theory framework helps point out several remedial strategies that
collective bargaining agents could use to establish credible commitment.