an essay on bargaining

Report | Unions and Labor Standards

Collective bargaining beyond the worksite : How workers and their unions build power and set standards for their industries

Report • By Lynn Rhinehart and Celine McNicholas • May 4, 2020

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Editor’s Note: The content of this report was prepared prior to the COVID-19 pandemic, and the report does not reflect COVID-related impacts on the bargaining examples cited in the report.

What this report finds and why it matters

• The current legal framework for collective bargaining is outdated and does not match the realities of today’s workplaces, which are geographically fragmented and dispersed and heavily reliant on contractors, staffing agencies, and franchises.
• U.S. labor law is currently structured in a way that places significant obstacles in front of workers and unions seeking to bargain more broadly with employers in their industry to set standards.
• Despite the obstacles, experience has shown that when unions have built strength through strong membership and density, they have been able to bargain more broadly than for a single worksite, setting standards for an entire industry or region in the process. Policymakers should enact straightforward reforms to labor law that would facilitate this broader bargaining.

Introduction

The National Labor Relations Act (NLRA or Act)—the primary law establishing organizing rights in the private sector—has as its premise a lofty and admirable goal: “encouraging the practice and procedure of collective bargaining” between workers and their employers. 1 Since the Act’s passage in 1935, millions of working men and women have won higher pay, better health care and retirement benefits, stronger health and safety protections on the job, and other important improvements through forming unions and using their collective strength in bargaining with their employers. 2 Historically, strong unions have helped ensure that income growth is distributed broadly and not just to the richest households (see Figure A ). 3

As union membership declines, income inequality rises : Union membership and share of income going to the top 10%, 1917–2017

The data below can be saved or copied directly into Excel.

The data underlying the figure.

Sources: Data on union density follows the composite series found in Historical Statistics of the United States; updated to 2017 from unionstats.com. Income inequality (share of income to top 10%) data are from Thomas Piketty and Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics  118, no. 1 (2003), and updated data from the Top Income Database, updated March 2019.

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But the NLRA has fallen short of its goal. For decades, the percentage of private-sector workers covered by a union contract has steadily declined, and it now stands at just over 7% of the private-sector workforce—less than a third of what it was 40 years ago. 4 The overall union membership rate is now lower than when the NLRA was first enacted. 5

One of the consequences of this decline in union strength is a corresponding decline in the ability of unions in a particular sector or industry to set broad wage and benefit standards covering a large percentage of workers in that sector or industry. When unions were stronger, they were able to align the structure of collective bargaining with the corporate structure in their industry and negotiate agreements with employers that established wage standards for an entire industry. 6 Union contracts established wages for unionized workers, and nonunion employers raised wages to stay competitive. In this manner, unions helped raise wages for all workers, both union and nonunion.

When union density is high, nonunion workers benefit from higher wages

When the share of workers who are union members is relatively high, as it was in 1979, wages of nonunion workers are higher. For example, had union density remained at its 1979 level, average weekly wages of nonunion men in the private sector overall would be 5% higher (that’s an additional $2,704 in earnings for year-round workers), while weekly wages of nonunion men in the private sector without a college education would be 8%, or $3,016 per year, higher. 7

U.S. labor law is currently structured in a way that places significant obstacles in front of workers and unions seeking to bargain broadly with employers in their industry to set standards for their industry. Specifically, the NLRA establishes a single worksite, and at most a single employer, as the default unit for bargaining. 8 Workers and unions can try to win a broader bargaining unit, such as a multi-facility bargaining unit of the same employer, but to do so they need to persuade the National Labor Relations Board (NLRB) of the appropriateness of the larger unit and organize support from a majority of employees in the bigger unit.

Current law allows employers to participate in the NLRB’s bargaining unit determinations, and employers use this process to manipulate the bargaining unit and delay and defeat union organizing drives. Employers often seek to add employees to the union’s proposed bargaining unit, not because they want to bargain with a larger unit, but to dilute the union’s support by adding employees the union has not yet organized. 9

Under current law, workers and unions cannot insist that employers in their industry bargain together on a multi-employer basis with the union or a group of unions. 10 Workers and unions are constrained in taking this multi-employer approach even though it would both coordinate bargaining within a sector or industry and prevent employers from pitting workers and unions at different locations against one another.

Despite the obstacles erected by the law and the problems created by anti-union employer tactics and declining union density, many unions have nevertheless been able to win and maintain bargaining that covers workers beyond an individual workplace. 11 Unions have achieved this through national agreements, through pattern bargaining, through negotiating master contracts, through multi-employer bargaining, and through campaigns that use both policy changes and bargaining power to cover more workers. 12 This report discusses various examples of these practices and the reasons why these practices are not as prevalent as they once were, and concludes by offering policy suggestions that would facilitate broader bargaining by giving workers more power to define the bargaining structure.

Current law of collective bargaining

When workers seek to form a union, they petition the NLRB to hold a representation election for a particular group of workers—the “bargaining unit.” 13 The NLRB then reviews whether the proposed bargaining unit is “appropriate.” This analysis centers on whether workers in the proposed bargaining unit share a “community of interest,” in other words, whether they share common interests and experience at the workplace such that it is reasonable for them to bargain together with the employer over their wages, hours, and working conditions. 14

The NLRB’s long-standing view is that a “single-facility” unit is presumptively appropriate. 15 This rule stems from language in the NLRA describing potential bargaining units as “the employer unit, craft unit, plant unit, or subdivision thereof.” 16 Typically the single facility is a single workplace, although workers and unions can seek a multi-location unit, or even a national unit, and seek to persuade the NLRB of the appropriateness of such a unit. The analysis turns on whether the work, workforce, supervision, and labor relations at the various facilities are sufficiently interrelated to justify a multi-facility unit. 17 The NLRB’s bargaining unit determinations are rarely overturned.

Once the NLRB’s bargaining unit determination is made, the union must win a representation election among the employees in the unit.

The NLRA’s language has been interpreted over the years to mean that the largest possible unit that the NLRB can mandate is an employer-wide unit: a wall-to-wall bargaining unit encompassing a single employer’s employees. The courts have ruled that the NLRB does not have the authority to order a multi-employer bargaining unit, even if several similar facilities are situated near one another and the workers want to bargain together.

Employers may, if they wish, agree with workers’ request to bargain on a multi-employer basis, and there is a long history of this practice. It is voluntary on the employers’ part, but if employers have agreed to multi-employer bargaining, the NLRB will enforce this practice. With multi-employer bargaining, each participating employer agrees to designate an agent—typically an association—for purposes of collective bargaining, and each employer is then bound by the terms of the negotiated agreement. In the 1970s, an estimated 10% of private-sector workers were covered by multi-employer collective bargaining agreements. 18

A leading expert has observed the “narrowness” of the single-worksite-and-single-employer approach, stating, “The NLRA, with its emphasis on firm-based organizing and bargaining, is mismatched with the globalized economy and its multiple layers of contracting.” 19

In contrast to the NLRA’s bias for single-worksite bargaining units, the Railway Labor Act, which governs union representation in the railroad and airline industries, specifies that bargaining units are employer-wide, national units. Workers seeking union representation under the Railway Labor Act petition for a nationwide unit of all the employer’s workers in their particular class or craft, such as airplane mechanics, flight attendants, baggage handlers, or customer service agents. This enables each union in the railroad and airline industries—once it has won collective bargaining rights for the group through an election—to bargain nationally with a single national employer.

Not only is the current law biased in favor of single-facility bargaining units, but it also places obstacles in the way of workers and unions seeking to coordinate bargaining at multiple facilities. For example, current law restricts the ability of workers and unions to coordinate expiration dates for contracts covering different bargaining units at multiple facilities, even though common expiration dates would bring rationality and order to the bargaining process. Nor can workers picket or try to put economic pressure on a “neutral” employer other than their own in order to promote their objectives at the bargaining table—such activity is most likely to be ruled illegal as an unlawful “secondary boycott.” Finally, workers and unions are limited in their ability to bargain over the labor practices of the suppliers and contractors their employer hires to perform work. Unless these practices directly relate to the work and workers covered by the collective bargaining agreement, they are likely to be viewed as “permissive” subjects of bargaining, meaning that the employer is not legally required to bargain over them if it chooses not to.

How current law impedes broad bargaining

• A single worksite is the default bargaining unit.
• Workers cannot insist on multi-employer bargaining.
• Workers cannot put economic pressure on a “neutral” employer.
• Employers are often not required to bargain over terms of contractor and supplier employees (such bargaining may be “permissive,” i.e., voluntary on the part of the employer).
• Workers are limited in coordinating bargaining across facilities on issues like contract expiration dates.

Examples of successful bargaining beyond a single worksite

Despite the legal impediments outlined above, workers and unions in many industries throughout the country have found ways to broaden their bargaining relationships with employers to cover multiple worksites and, in some cases, multiple employers. A variety of approaches are described below.

National bargaining

Unions can win certification of a nationwide bargaining unit of a single employer and bargain a single collective bargaining agreement covering all locations of that employer, or they can bargain nationally on a multi-employer basis. Examples of both follow.

Trucking industry

One of the most famous examples of national multi-employer bargaining that established standards for an entire industry is the Teamsters Master Freight Agreement, negotiated by Jimmy Hoffa in the 1960s. 20 When it was first adopted, the Master Freight Agreement covered more than 450,000 drivers, had literally hundreds of signatory employers, and set standards for the entire trucking industry. However, the agreement has been undermined by deregulation and by consolidation in the industry. Nevertheless, the Teamsters are still able to bargain national agreements that raise standards for tens of thousands of freight industry workers. The Master Freight Agreement covers YRC Freight, Holland, and New Penn, which together employ approximately 24,000 truck drivers, dockworkers, and clerical workers at over 200 locations across the United States. In addition, the Teamsters have national agreements with ABF Freight, covering more than 8,000 workers at over 150 locations, and UPS Freight, covering 12,000 freight drivers and dockworkers. The Teamsters also represent nearly 300,000 UPS package car, air, and feeder drivers as well as loaders, sorters, and clerks across 400 UPS sites—making the contract covering these workers the largest private-sector collective bargaining agreement in the United States. In the goods transportation logistics industry, the Teamsters have national agreements with DHL covering nearly 5,000 workers at over 50 locations. 21

Telecommunications

After decades of organizing and struggle, the Communications Workers of America (CWA) achieved a national collective bargaining agreement with AT&T that allowed the union to bargain for 500,000 workers in the telecommunications industry. But subsequent deregulation and the breakup of “Ma Bell” into eight regional companies (“Baby Bells”) in the 1980s destroyed the national single-employer agreement, and nonunion companies quickly took advantage of deregulation to set up operations and undermine standards. Now CWA must bargain with AT&T for 11 individual and geographically dispersed bargaining units: six for workers in traditional wireline services, four for workers in mobile wireless services, and one focused on DSL customer service. CWA also bargains separately with the other regional bell companies, which became Verizon and CenturyLink. Today the union represents about 100,000 workers at AT&T across the country and another 50,000 at the remnants of the regional bells. All of the telecommunications operations compete with nonunion cable for the same broadband market, further eroding bargaining power. 22

Paper industry

The United Steelworkers have used their union’s density and strength to build a national bargaining relationship with International Paper (IP). In the past, the union’s relationship with IP was contentious, and bargaining was fragmented among many different regions and locals, but the union now bargains with IP over two national agreements setting wages and benefits. One agreement covers 5,800 workers at 17 paper mills, and the other agreement covers 4,700 workers at 55 box plants around the country. Site-specific issues are then bargained at the local level. The union represents workers at about 70% of IP’s mills and 60% of IP’s box plants. In contrast, the union represents workers at only four of 18 Kimberly Clark facilities, and the union has not yet been able to win national bargaining at Kimberly Clark. 23

Under the Railway Labor Act, unions that have won an election and collective bargaining rights for a craft or class of employees bargain a national agreement for that national bargaining unit with a railroad or airline. The unions are sometimes able to set standards that other employers follow. For example, the collective bargaining agreements reached by unions on the freight railroads (class 1), where there is high union density, set a pattern for unionized commuter rail and smaller railroads. 24

Coordinated national bargaining

Unions can join together in a coalition to bargain with a nationwide employer on behalf of different groups of employees.

Manufacturing (General Electric)

For decades, a coalition of unions has bargained with General Electric through a coordinated bargaining council . In the 1980s, this bargaining covered 40,000‒50,000 GE workers, and the collective bargaining agreement set a pattern that would apply to other manufacturers of electrical appliances, equipment, and component suppliers. Because of corporate changes, downsizing, and loss of jobs to outsourcing and trade, currently only approximately 6,600 workers are covered by collective bargaining agreements at GE.

Pattern bargaining

Under pattern bargaining, a union will bargain with an initial employer to reach an agreement that then becomes the pattern for subsequent agreements with other employers in the industry.

Automakers GM, Ford, and Fiat-Chrysler

Perhaps the most well-known example of pattern bargaining involves the United Auto Workers union and General Motors, Ford, and Fiat-Chrysler. The collective bargaining agreements negotiated through bargaining with the three automakers not only set wages and benefits for tens of thousands of autoworkers, but also have an impact on nonunion auto manufacturers, which try to keep their wages competitive with their unionized counterparts. 25 Under the UAW’s approach to pattern bargaining, the union bargains with all three auto companies and then picks a bargaining target to set the standard. In 2019, the target was General Motors. After failing to reach an agreement by the expiration of the contract, 49,000 GM workers went on strike for six weeks in the fall of 2019 in an effort to win a better agreement from GM. As a result of the strike, workers protected their health care benefits and won a substantial pay raise in the form of base wage increases and an accelerated progression to top pay for newer workers. 26 The agreement set the pattern for the industry, and the UAW was able to reach an agreement with Ford very quickly after the GM settlement, and later reached an agreement with Fiat-Chrysler.

A challenge faced by the UAW (and other unions in their respective industries) is when employers try to evade the terms of the collective bargaining agreement by establishing new operations outside the scope of the agreement. For example, GM formed a new company, Lordstown Motors, with partner LG Chem, to build a new facility next to the existing Lordstown, Ohio, plant, rather than doing the work at the Lordstown plant under the UAW‒GM agreement. 27

UNITE HERE, the hotel and hospitality industry union, has developed pattern bargaining with major hotel chains that approaches national bargaining. The benefits of this approach are evident from what UNITE HERE members were able to achieve at the Marriott Corporation in the fall of 2018. Seven different UNITE HERE locals in seven locations—Detroit, Boston, San Francisco, Oakland, San Jose, San Diego, and Hawaii—bargained separate contracts, but because the prior collective bargaining agreements expired at the same time, the workers had more leverage than they would have had if they had been bargaining in a single location. The workers went on strike at Marriott hotels in each of the locations, demanding better pay and benefits, under the banner of “One Job Should Be Enough.” Workers won substantial raises, improvements in their pensions, and strong protections against sexual harassment, among other achievements. The agreements covered 7,700 of UNITE HERE’s 20,000 members working for Marriott. 28 Because the agreements have such broad coverage for workers at Marriott facilities across the country, the agreements set a standard for the industry, meaning that thousands more hotel workers employed by different companies in the seven locations won the same or similar improvements.

In the aerospace manufacturing and services industry, the Machinists Union bargains major national contracts with Boeing and Lockheed Martin that establish standards for the industry that the Machinists seek to achieve at other manufacturers. 29

Master contracts

Unions will sometimes negotiate a master contract with an employer or an employer association and then insist that newly organized employers sign on to the master agreement rather than negotiating an individual agreement. This arrangement is commonplace in the construction and entertainment industries, but is also used by other unions in other industries. (See examples of multi-employer bargaining below.)

Multi-employer bargaining

Unions in several industries have bargaining relationships with groups or associations of employers—an arrangement that allows them to negotiate wage and benefit standards across an industry or geographic area. In addition to the Teamsters’ Master Freight Agreement described above, examples from other industries are outlined below.

Building trades

The industry with the most widespread practice of multi-employer bargaining is the construction industry. By long-standing practice and tradition, unions in the building trades bargain multi-employer master agreements with employer associations in their craft, and employers, including newly organized employers, adopt the master agreement often by signing letters of assent agreeing to be bound by the master agreement. Most of these agreements are bargained locally or regionally by the individual construction unions with their counterpart employer associations. For example, locals of the International Brotherhood of Electrical Workers (IBEW) bargain master contracts with local chapters of the National Electrical Contractors Association (NECA). Bargaining is streamlined by the national IBEW and NECA through the development of standard contract language that is approved by both national organizations. 30

In addition, the national building trades unions, through their trade department at the AFL-CIO, bargain national agreements with contractors for both construction and maintenance projects. For example, currently there are national building trades agreements covering 301 maintenance projects in 34 states involving 118 signatory employers. 31

Commercial cleaners

Local 32BJ of the Service Employees International Union (SEIU) offers a compelling example of what workers and their unions are able to accomplish when they have density and bargaining power. The union—which represents workers in 12 states and Washington, D.C.—achieves major gains for workers in the property services industry through a combination of multi-employer bargaining, group bargaining, bargaining master contracts, and identifying policy levers to facilitate bargaining.

Recently, the union completed negotiations for approximately 75,000 commercial building cleaners up and down the East Coast. The New York City agreement alone covers 22,000 commercial cleaners. 32 The union bargains with a multi-employer association or with groups of employers, and its agreements bind the signatory employers in all cities where the union has local agreements. In other words, by way of example, in the New York City agreement, employers in New York City agree to abide by the collective bargaining agreement in Philadelphia if they have operations in Philadelphia. In the recent bargaining, SEIU Local 32BJ won substantial wage increases, improvements in pensions, new protections against sexual harassment, and more. Employers also agreed to a union recognition process for cleaners in Miami, opening the door to extending collective bargaining protections to another 1,500 building cleaners in that city.

Grocery workers

The United Food and Commercial Workers International Union (UFCW) engages in multi-employer bargaining with the major grocery chains in Southern California. Bargaining used to cover more grocers, but because of mergers in the industry, only two major chains—Ralphs and Albertsons—now participate in the bargaining. In the fall of 2019, the union was able to reach an agreement covering 46,000 workers at more than 500 stores. The agreement provided for wage increases, preserved health care benefits, guaranteed more hours, and helped close the wage differential between job classifications. 33 While only two major grocers were at the bargaining table, the collective bargaining agreement set a standard, and other local grocery chains—including Gelson’s, Stater Bros., and Super A Foods—have signed on to bargaining contracts with their workers that have comparable or better terms. A challenge for the union is when unionized grocers enter into partnerships and other business arrangements with new entities and use them to erode bargaining unit work—by, for example, contracting out work that would be done by bargaining unit members to companies like Instacart—or when unionized grocers create lower labor standards for chains in food deserts, as Kroger did with its Food 4 Less subsidiary.

Auto dealerships and auto repair shops

The Machinists Union has several regional multi-employer agreements covering hundreds of auto dealerships and auto repair shops in Chicago, San Francisco, New York, and other cities. These agreements set wages and benefits for thousands of employees. 34

Food canneries

The Teamsters have a long-established multi-employer bargaining relationship with the Cannery Council, an association of food processors with operations in central California, including Del Monte and Heinz. The most recent collective bargaining agreement raised wages by more than 10% for the 12,500 workers under the agreement. 35 With corporate consolidations and more automation in the industry, the Cannery Council agreement covers far fewer employers and workers than it once did. At one point, the agreement covered as many as 50,000 workers, but it now covers only about 25% of that number.

‘Supply chain’ bargaining

Under current law, workers and unions are limited in their ability to insist that their employer bargain with them over terms and conditions of employment for the employees of their employer’s suppliers and subcontractors. The current legal definition of “joint employer” is too narrow to bring employers together at the bargaining table, and employers are typically unwilling to bargain with their unions about the employment terms of their contractors. 36 Nevertheless, there are exceptions. For example, the Machinists Union has negotiated with both a government contractor and subcontractor at the table and won agreements that cover employees of both employers. This approach is more efficient than bargaining separate agreements with two companies that are operating at the same facility, and it establishes common standards for the contractor’s and subcontractor’s employees. 37

Using policy levers to facilitate bargaining

Unions have also been able to win better working terms and conditions for workers through campaigns for local city ordinances.

Airport services

In Philadelphia, SEIU Local 32BJ lobbied for, and won, passage of ordinances establishing a minimum wage and paid sick days for employees of contractors at the Philadelphia International Airport. The union then won recognition as the representative of 1,400 Prospect Airport Services and PrimeFlight Aviation Services employees who work as baggage handlers, wheelchair attendants, cabin cleaners, and more. The union was able to build on the minimum standards established by the ordinance and, in their first collective bargaining agreement, win provisions that exceed the requirements of the paid sick day ordinance. 38

Domestic employees

Unless they work for an agency, domestic employees (such as nannies, house cleaners, and gardeners) are not covered by the NLRA, and their employment is dispersed throughout millions of individual households. Recently, worker advocates in Seattle won passage of a city ordinance that sets a minimum wage, meal breaks, and days off for domestic workers and establishes a Domestic Workers Standards Board, through which employers, domestic workers, and worker organizations meet to discuss other recommendations and standards for domestic workers. 39 An estimated 33,000 domestic workers are covered by the law. 40

Policy changes that would facilitate broader bargaining

As the examples listed above have demonstrated, when unionized workers have significant density within an industry, occupation, sector, or employer, they can overcome the obstacles to broader-than-single-worksite bargaining and win significant gains at the bargaining table with their employers—gains that not only benefit workers directly covered by the collective bargaining agreement, but also raise wages and set standards for nonunion workers in the area. The following national labor law reforms would strengthen workers’ bargaining power and enable them to bargain and set standards more broadly in their occupation, sector, or industry.

Passing the PRO Act

The Protecting the Right to Organize (PRO) Act removes obstacles to workers organizing, curtails employer interference in worker organizing, and establishes meaningful penalties when employers break the law. 41 The PRO Act reins in employer efforts to gerrymander bargaining units to undermine union organizing drives by keeping employers out of the representation process entirely. 42 The PRO Act contains a strong joint-employer standard 43 that would enable workers and unions to bring the relevant employers to the bargaining table. It establishes a process for newly formed unions and employers to successfully negotiate a first agreement. It removes prohibitions against secondary strikes and boycotts—allowing workers to put economic pressure on a “neutral” employer, an employer other than their own. These measures and others in the PRO Act would meaningfully strengthen workers’ ability to form unions, bargain with their employers, and pursue the broader bargaining models outlined above.

Changing the law to give workers the power to designate multi-employer bargaining units and multi-union bargaining

The NLRA should be amended to allow workers to designate a multi-employer bargaining unit, or to tie several bargaining units together in multi-employer bargaining, with one or more unions. This bargaining could be either horizontal (within an industry) or vertical (to capture the supply chain). Currently multi-employer bargaining is at the employer’s option: Workers, unions, and the NLRB have no ability to insist on this format, even when it makes the most sense. The voluntary nature of multi-employer bargaining allows employers to pit workers and unions in one location against one another. The law should be changed to give workers and unions the ability to request multi-employer bargaining, with direction given to the NLRB to approve the request unless there are compelling reasons why the approach should not be followed.

Changing the law to facilitate coordinated (multi-union) bargaining

The NLRA should be amended to make clear that workers and unions in a common sector or industry may coordinate and insist on key contract terms—such as the term of the collective bargaining agreement, terms for the employer’s use of subcontractors, etc.—that help them build power within their sector or industry.

Changing the law to facilitate extension of contracts to new groups of workers

The NLRA could be amended to add provisions for extending the terms of a collective bargaining agreement to cover a group of workers newly organized by a union that has density in the industry. 44 An example of this kind of extension is that provided under the Baigent-Ready Proposal, named for two special advisers to the British Columbia Minister of Labour. Under the proposal, a union in a sector (defined as a geographic area with similar enterprises doing similar work) with low union density would have the opportunity to seek certification for a multi-employer unit in the sector if the union could demonstrate support from at least 45% of workers at each location within the proposed unit. Certified unions would then file for individual elections at each worksite, and the collective bargaining agreement negotiated in the sector would automatically be extended to new facilities organized in the sector. 45 This approach would facilitate extending wage and benefit standards to newly organized groups, and would save the workers, unions, and employers involved the time and expense of negotiating a new collective bargaining agreement.

Developing models for sectoral bargaining

Proposals have been advanced for a sectoral bargaining system in the United States, to assure the broadest possible collective bargaining coverage. 46 Sectoral bargaining is used in many industrialized democracies, and it extends the benefits of negotiated agreements to all enterprises in a given sector. 47 While the idea of sectoral bargaining in the United States is being further explored and developed, the examples outlined above show that when workers are able to form strong unions, they have the power to set standards for their industries. Policy reforms should be undertaken to facilitate this outcome.

About the authors

Celine McNicholas  is Director of Government Affairs at EPI. She previously served as Director of Congressional and Public Affairs at the NLRB and Labor Counsel to the House Education and Labor Committee.  Lynn Rhinehart  is a Senior Fellow at EPI. She previously served as General Counsel of the AFL-CIO, a federation of 55 national and international labor organizations.

Acknowledgments

The authors gratefully acknowledge the assistance of the following individuals who provided the examples and information outlined in this report:

Jennifer Abruzzo , Special Counsel, and George Kohl , Former Special Assistant to the President (retired), Communications Workers of America; Larry Engelstein , Secretary-Treasurer, and David Prouty , General Counsel, SEIU 32BJ; Peter Ford , General Counsel, United Food and Commercial Workers (UFCW), and Margo Feinberg , for UFCW as Attorney with Schwartz, Steinsapir, Dohrmann & Sommers of Los Angeles; Leeann Foster , International Vice President, and David Jury , General Counsel, United Steelworkers; Neil Gladstein , Director of Strategic Resources, International Association of Machinists and Aerospace Workers; Iain Gold , Director of Strategic Research, and Cassandra Ogren , Research Director, International Brotherhood of Teamsters; Jennifer Kelly , Research Director, United Auto Workers; Joe McCartin , Professor of History, Georgetown University; Richard McCracken , McCracken, Stemerman & Holsberry, for UNITE HERE; Jon Newman , Esq., Sherman Dunn, for the International Brotherhood of Electrical Workers and North America’s Building Trades Unions; Richard Resnick , Esq.; Kelly Ross , Policy Director, AFL-CIO.

1. 29 USC 151.

2. Josh Bivens et al., How Today’s Unions Help Working People: Giving Workers the Power to Improve Their Jobs and Unrig the Economy , Economic Policy Institute, August 2017.

3. Heidi Shierholz, Working People Have Been Thwarted in Their Efforts to Bargain for Better Wages by Attacks on Unions , Economic Policy Institute, August 2019.

4. Data are for 2019. See Heidi Shierholz, The Number of Workers Represented by a Union Held Steady in 2019, While Union Membership Fell , Economic Policy Institute, January 2020.

5. Heidi Shierholz, Working People Have Been Thwarted in Their Efforts to Bargain for Better Wages by Attacks on Unions , Economic Policy Institute, August 2019.

6. See Josh Bivens et al., How Today’s Unions Help Working People: Giving Workers the Power to Improve Their Jobs and Unrig the Economy , Economic Policy Institute, August 2017. The report describes examples of unions setting standards for an industry or geographic area.

7. The wage estimates are in 2013 dollars and look at what wages would have been in 2013 had union density (the share of workers in similar industries and regions who are union members) remained at its 1979 levels. See Jake Rosenfeld, Patrick Denice, and Jennifer Laird, Union Decline Lowers Wages of Nonunion Workers: The Overlooked Reason Why Wages Are Stuck and Inequality Is Growing , Economic Policy Institute, August 30, 2016.

8. See 29 USC 159(b): “The Board shall decide in each case whether…the unit appropriate for the purposes of collective bargaining shall be the employer unit, craft unit, plant unit, or subdivision thereof.”

9. Celine McNicholas et al., Unprecedented: The Trump NLRB’s Attack on Workers’ Rights , Economic Policy Institute, October 2019.

10. Pacific Metals Co. , 91 NLRB 696 (1950).

11. For a discussion of the ways employers legally and illegally work to defeat union organizing and union contract negotiation efforts, see Celine McNicholas et al., Unlawful: U.S. Employers Are Charged with Violating Federal Law in 41.5% of All Union Election Campaigns , Economic Policy Institute, December 2019.

12. In general terms, a national agreement is a single collective bargaining agreement between a national employer with multiple facilities (such as General Motors) and the union representing the employer’s employees. The agreement is binding on all facilities where the union represents workers. Workers can also seek to bargain nationally on a multi-employer basis, but participation by employers is voluntary. A pattern agreement is a lead agreement with an employer that establishes wages, benefits, and other terms and conditions of employment that the union then takes to other employer(s) of workers who are represented by the union in order to attempt to persuade the other employer(s) to follow the pattern. There is no legal obligation on an employer to agree to a pattern agreement, only to bargain in good faith. A master contract is an agreement negotiated between a union and an employer or a group of employers setting wages, benefits, and other terms and conditions of employment for all workers covered by the agreement—workers who may work at many facilities for many different employers (for example, construction workers). A multi-employer agreement , as its name suggests, is an agreement between a union representing employees of several different employers and those employers, which agree to bargain together and be bound by the same agreement. These various categories of bargaining may overlap; for example, a master contract may also be a multi-employer agreement or a national agreement.

13. Workers may also seek recognition directly from their employer through a process known as card-check recognition or majority sign-up. When the union is recognized in this manner by the employer, workers do not need to go through the NLRB process.

14. National Labor Relations Board, “An Outline of Law and Procedure in Representation Cases,” (August 2012), 135–136.

15. National Labor Relations Board, “An Outline of Law and Procedure in Representation Cases,” (August 2012), 134.

16. 29 USC 159(b).

17. National Labor Relations Board, “An Outline of Law and Procedure in Representation Cases,” (August 2012), 135–136.

18. David Madland, How to Promote Sectoral Bargaining in the United States , Center for American Progress Action Fund, July 2019.

19. Kate Andrias, “ The New Labor Law ,” Yale Law Journal 126, no. 1 (October 2016): 2–100.

20. Teamsters, “ Master Freight Agreement ” (web page), accessed March 5, 2020.

21. Interview with Iain Gold, director of strategic research, and Cassandra Ogren, research director, International Brotherhood of Teamsters, conducted by Lynn Rhinehart on January 14, 2020.

22. CWA President Chris Shelton, remarks made during “Sectoral Bargaining: America’s Past, Present, and Future,” a session of the  Future of American Labor: Initiatives for a New Era conference, Georgetown University Law Center, February 8, 2019.

23. Interview with Leeann Foster, United Steelworkers International vice president, conducted by Lynn Rhinehart on February 11, 2020.

24. Interview with Neil Gladstein, director of strategic resources, International Association of Machinists and Aerospace Workers, conducted by Lynn Rhinehart on January 15, 2020.

25. Noam Scheiber, “ Nissan Workers in Mississippi Reject Union Bid by U.A.W. ,” New York Times , August 5, 2017 (reporting on a UAW organizing campaign at Nissan, and noting that “veteran workers at the plant make about $26 per hour, typically only a few dollars less than veteran workers represented by the union at the major American automakers, and well above the median wage in Mississippi”).

26. Neal E. Boudette, “ G.M. Workers Approve Contract and End U.A.W. Strike ,” New York Times , October 25, 2019.

27. Neal E. Boudette, “ Buyer of G.M. Lordstown Plant Promises Union Work and Wages ,” New York Times , November 7, 2019; Interview with Jennifer Kelly, research director, United Auto Workers, conducted by Lynn Rhinehart on January 13, 2020.

28. Karen Schwartz, “ Deal in San Francisco Ends Nationwide Marriott Strikes ,” New York Times , December 5, 2018.

29. Interview with Neil Gladstein, director of strategic resources, International Association of Machinists and Aerospace Workers, conducted by Lynn Rhinehart on January 15, 2020.

30. National Electrical Contractors Association (NECA), “ Agreement Language and Information ” (web page), accessed March 5, 2020.

31. North America’s Building Trades Unions (NABTU), “ Agreements ” (web page), accessed March 5, 2020.

32. SEIU 32BJ, “ Strike Averted: NYC Office Cleaners Reach Tentative Agreement ” (press release), December 20, 2019.

33. Russell Redman, “ Grocery Workers Ratify New Contract in Southern California ,” Supermarket News , September 12, 2019.

34. Interview with Neil Gladstein, director of strategic resources, International Association of Machinists and Aerospace Workers, conducted by Lynn Rhinehart on January 15, 2020.

35. Teamsters Joint Council 7, “ Best Contract Ever for Cannery Council ” (press release), July 25, 2018.

36. The Trump administration issued a rulemaking in February that returns to a narrow joint-employer standard that limits when a firm can be found to be a joint employer and thus share liability for violations of the NLRA. See Celine McNicholas and Heidi Shierholz, “ New Joint-Employer Rule Strips Workers of Bargaining Rights ” (statement), Economic Policy Institute, February 25, 2020. For how the narrower definition of joint employer constricts bargaining, see Celine McNicholas and Marni von Wilpert, The Joint Employer Standard and the National Labor Relations Board: What Is at Stake for Workers? Economic Policy Institute, May 2017.

37. It is worth noting that a supply-chain bargaining arrangement in the clothing and textile industry has a long history, dating back to the early 20th century, when suppliers (“jobbers”) entered into collective bargaining agreements with contractors and workers. See Mark Anner, Jennifer Bair, and Jeremy Blasi, “Towards Joint Liability in Global Supply Chains: Addressing the Root Causes of Labor Violations in International Subcontracting Networks,” Comparative Labor Law and Policy Journal 35, no. 1 (January 2013): 1–43.

38. SEIU 32BJ, “ Mayor Kenney Announces Landmark Agreement Between 32BJ SEIU and American Airlines’ Contractors ” (press release), August 30, 2017.

39. City of Seattle, “ Domestic Workers ” (web page), Seattle.gov, accessed March 5, 2020.

40. Kathy White, “ Seattle Domestic Workers Bill of Rights Takes Effect July 1 ” (blog post), Compliance Poster Company, May 9, 2019.

41. Celine McNicholas and Lynn Rhinehart, “ The PRO Act: Giving Workers More Bargaining Power on the Job ,” Working Economics Blog (Economic Policy Institute), May 2, 2019; Protecting the Right to Organize Act of 2019 , H.R. 2474, 116th Congress (2019‒2020).

42. Celine McNicholas et al., Unlawful: U.S. Employers Are Charged with Violating Federal Law in 41.5% of All Union Election Campaigns , Economic Policy Institute, December 2019.

43. Celine McNicholas and Heidi Shierholz, “ EPI Comments Regarding the Standard for Determining Joint-Employer Status ,” comments submitted to National Labor Relations Board, December 9, 2018.

44. Extension contracts are common around the world, according to the International Labour Organization. See International Labour Organization, Collective Agreements: Extending Labour Protection , ed. Susan Hayter and Jelle Visser, 2018. The Baigent-Ready Proposal described in the text is a comparatively narrow approach to contract extension.

45. Sara Slinn, “ Collective Bargaining ,” Changing Workplaces Review , Ontario Ministry of Labour, 2015, 84–91; British Columbia Ministry of Labour and Consumer Services, Recommendations for Labour Law Reform (Victoria, B.C., 1992), Appendix 3, 35. See also David Madland, How to Promote Sectoral Bargaining in the United States , Center for American Progress Action Fund, July 2019.

46. Sharon Block and Ben Sachs, Clean Slate for Worker Power: Building a Just Economy and Democracy , Harvard Law School Labor and Worklife Program, January 2020.

47. International Labour Organization, Collective Agreements: Extending Labour Protection , ed. Susan Hayter and Jelle Visser, 2018.

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2 Theory of Bargaining

• Published: September 2022
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This chapter presents the economic theory of bargaining. It begins with the positive theory, explaining concepts like efficiency and distribution. It develops the Private Coase Theorem, which is familiar from private law, and the Public Coase Theorem, which applies to actors like legislators, administrators, and judges. Turning to normative theory, the chapter explains when bargaining by public law actors is likely to benefit or harm the public. In the interpretive analysis, the chapter applies economics to questions about the “intentions” of lawmakers. The chapter addresses topics such as vote trading, minority rights, public goods, and the use of legislative history by judges.

Bargaining pervades government—warring nations negotiate peace, rival parties amend the constitution, two houses of Congress reconcile different bills, judges haggle over a decision, and so on. Because bargaining pervades government, it comes first in our analysis. We apply to public law the same theory of bargaining that economists apply to goods. We show that lawmakers bargain with each other because successful bargains can benefit them, just as trading stamps can benefit collectors. A successful bargain among officials concludes in lawmaking or other acts to create mutual benefit. This logic applies to legislators, regulators, and even judges.

Besides explaining the creation or “supply” of public law, bargaining can explain “demand” for public law. Successful private bargaining reduces the pressure to make law. If a nightclub agrees to abate noise, its neighbors do not seek noise ordinances. Conversely, unsuccessful private bargaining increases pressure to make law. If the nightclub and its neighbors fail to agree, the neighbors seek noise ordinances. Whether private parties agree among themselves or officials make new law depends on which group can strike a deal. To strike a deal, parties must overcome obstacles to bargaining.

These ideas illuminate fundamental questions in public law, including the following:

Example 1 : When and why do legislators trade votes to enact laws?

Example 2 : Most legislators cut deals—you vote for my bill, and I will vote for yours. In contrast, professional norms prohibit judges from trading votes across cases. When should people bargain across issues like most legislators, and when should they vote their conscience like most judges?

Example 3 : Congress sues the President, regulators sue manufacturers, and citizens sue police. Most legal disputes settle out of court, but some go to trial. Why do some disputes settle and others litigate?

Example 4 : At the U.S. Constitutional Convention, populous states wanted people represented in Congress (states with more citizens get more representatives). In contrast, small states wanted states represented (equal number of representatives per state). The “Great Compromise” resulted in representation of people in the House of Representatives and representation of states in the Senate. It has endured for over 200 years. Meanwhile, Congress rewrites the budget every year. Why do some political bargains persist and others change?

To answer these questions, this chapter begins with the positive theory of bargaining, turns to normative consequences, and concludes by showing how bargaining can aid in the interpretation of laws.

I. Positive Theory of Bargaining

Bargaining usually mixes two activities: production and distribution. Production refers to the creation of value. Distribution refers to the allocation of value among people. To distinguish production and distribution, we consider two pure bargaining situations: games of pure distribution, and games of pure production.

A. Conflict versus Cooperation

George Washington wrote, “[W]e must consult our means rather than our wishes.” 1 Lawmakers confront this reality every time they engage in a fundamental activity of government: budgeting. Consider bargaining by legislators over how to spend the state’s budget. If the total budget is fixed, then each dollar spent on one project is a dollar that cannot be spent on another. Allocating expenditures on projects is a zero-sum game, like poker. For one player to win, another must lose; wins and losses sum to zero. Since value gets distributed but not produced, allocating items in a fixed budget is a game of pure distribution .

Games of pure distribution are often unstable, as players make and unmake coalitions to secure more for themselves. Imagine three legislators bargaining over how to spend $100 on three projects (A, B, C). The first legislator would prefer to spend everything on project A ($100, $0, $0). The second legislator would prefer to spend everything on project B ($0, $100, $0). The third legislator would prefer to spend everything on project C ($0, $0, $100). 2 The legislature operates under majority rule, meaning any coalition of two legislators can determine how to spend the money. They begin bargaining with a proposal to divide the money equally among the projects ($33, $33, $33). Then the first legislator proposes spending equally on the first two projects and none on the third project ($50, $50, $0). This proposal commands a majority of votes—2 to 1—over the original proposal. As another alternative, the third legislator proposes cutting out the first project and spending on the second and third projects ($0, $75, $25). This proposal commands a majority of votes—2 to 1—over the preceding proposal. Among the three proposals, each one beats one and loses to one.

For every proposal, a counterproposal exists that two legislators prefer. 3 Consequently, there is no stable majority. The legislators run in circles as they haggle, and they may never reach agreement. The problem lies in the distributive nature of the game, not the specific proposals. Pure distribution games risk indefinite squabbling. To make sure that squabbling eventually ends, law restricts it. For example, some state constitutions impose deadlines on legislators to agree on a budget. 4

Opposite from games of pure distribution are games of pure production, or coordination games . A coordination game produces value without creating any conflict over its distribution. The interests of all players converge. 5 The best plan for anyone is best for everyone. To illustrate, imagine a group of motorists deciding whether to drive on the left or right side of the road. The drivers do not care which side they drive on as long as they all make the same choice. Moving from a noncooperative solution (they drive on different sides) to a cooperative one (they drive on the same side) produces value for all drivers (more safety and speed). Pure coordination games help to explain compliance with some laws. For example, the “Treaty of the Metre” establishes uniform methods of measurement that many countries follow, even though the treaty lacks an enforcement mechanism.

In games of pure production, coordination succeeds if the parties can communicate. If drivers approaching one another on a dirt road can exchange text messages, they will agree to swerve right or left to avoid an accident. With obstacles to communication, however, coordination may fail. Consider the width of railroad tracks. To connect railway lines, all tracks should have the same width. However, coordination is sometimes difficult. Countries in South America did not coordinate when building railroads, leading to tracks of different width in different places. In contrast, railroad tracks in the U.S. state of Utah connect seamlessly to tracks in the state of Nevada, thanks in part to the Pacific Railroad Acts. Coordination over tracks in the United States avoids the problem of some tracks in South America. Tracks connect in the United States because one central government can coordinate more easily than many separate governments.

Driving in Haiti can be chaotic and dangerous. Levy Azor, “a freelancer with a passion for order” but no legal authority, successfully directed traffic at a major intersection. He worked for tips. Suppose Azor favored drivers who tip. Why might non-tipping drivers still follow his signals? 6

Three legislators begin with the following payoffs: (20, 20, 60). After bargaining, their payoffs will be either (50, 50, 0) or (45, 35, 20). Are the legislators playing a game of production or distribution?

Medicaid is a congressional program that gives money to the states to spend on medical care for the poor. Spending on Medicaid is “mandatory,” not “discretionary,” meaning that the allocation of money to the states follows set formulas. 7 What problems does Congress avoid by making Medicaid spending mandatory instead of discretionary?

The Uniform Law Commission (ULC) is a nonprofit organization in the United States that drafts model statutes on topics where uniformity across the states is desirable. States can enact the model statutes, or modified versions of them, if they choose. What kind of game among states does the ULC help solve?

B. Mixed Bargains

Instead of being pure, most bargaining games are mixed: they involve production and distribution. The parties can cooperate and produce, provided they can agree on distribution. We explain these elements in public law by using an example. Criminals who violate federal law in the United States go to federal prison, and criminals who violate state law go to state prison. Sometimes one system becomes overcrowded, as when federal officials arrest more drug suspects than their prisons can hold. In that event, the federal government pays states a “jail-day rate” to house detainees. The jail-day rate expresses the value of a jail cell in money, just like market prices for automobiles, toothpaste, or insurance.

Adam is the warden of a state prison with extra cells, and he has authority to house federal prisoners. For safety, he prefers to keep his prison below capacity. Translating into money, the value he places on keeping some cells empty equals $3,000. Blair works for the U.S. Marshals Service. She would prefer to transfer some federal detainees to Adam’s prison rather than overcrowd the federal facility. She has a budget of $5,000 and authority to negotiate the jail-day rate. Let’s assume the value she places on transferring the detainees equals $4,000. Since Adam values the cells less than Blair, there is scope for a bargain. Adam will not accept less than $3,000, and Blair will not pay more than $4,000. The jail-day rate will have to be somewhere in between. 8

Some technical language clarifies the logic of this example. The parties have engaged in a bargaining game , which means communication that may yield an agreement. The noncooperative solution occurs if the parties cannot agree. In that case, Adam’s prison remains below capacity, which is worth $3,000 to him. Also, if the parties cannot agree, then Blair retains the $5,000 in her budget to spend on something other than Adam’s extra cells. The noncooperative payoffs equal $3,000 to Adam and $5,000 to Blair. 9

The players’ noncooperative payoffs are called threat values . Here’s why. In the course of bargaining, Adam and Blair may assert facts (“The detainees are violent”), appeal to norms (“$3,700 is an unfair price”), and make threats (“I won’t take less than $3,500”). The economic theory of bargaining focuses on the credibility of threats.

Adam and Blair both can make credible threats. Without Blair’s cooperation, Adam’s prison remains below capacity, which he values at $3,000. He can credibly threaten not to cooperate unless the price equals $3,000 or more, so his threat value is $3,000. Similarly, Blair starts with $5,000, so she can credibly threaten to walk away unless she gets more than that from the deal. Her threat value is $5,000. If the parties fail to cooperate, Adam keeps his value from the empty cells of $3,000, and Blair keeps her budget of $5,000.

To generalize, a credible threat demands no more than the actor can obtain without the other’s cooperation. The payoff that the first actor can obtain without the second actor’s cooperation is the first actor’s noncooperative payoff. Thus, a credible threat asks for no more than the threatener’s noncooperative payoff. The sum of the threat values is the noncooperative value of the game . In the case of Adam and Blair, the noncooperative value equals $8,000.

By bargaining successfully, Adam and Blair can reallocate a resource (empty prison cells) from someone who values it less (Adam) to someone who values it more (Blair). With cooperation, Blair receives her use-value of the cells, which is $4,000. To use the cells, Blair pays some of her $5,000 to Adam. For the sake of example, let’s assume she pays him $3,600. Adam’s cooperative payoff equals $3,600. Blair’s cooperative payoff equals her use-value of the cells ($4,000) plus her remaining money ($1,400), so $5,400. Thus, $9,000 equals the sum of the cooperative payoffs and the cooperative value of the bargaining game.

Notice that the cooperative value of the game is $9,000 and the noncooperative value is $8,000. The cooperative surplus equals the amount by which the game’s cooperative value exceeds its noncooperative value. In this example, cooperation produces a surplus of $1,000.

In addition to producing a surplus, bargaining determines its distribution between the parties. The price distributes the surplus from cooperation, but it usually does not affect the total amount of the surplus. For example, if Adam and Blair agree on a price of $3,600 as described earlier, then Adam gets $600 of the surplus and Blair gets $400 of the surplus. Alternatively, if the price is $3,800, Adam gets $800 of the surplus and Blair gets $200. In both cases the surplus equals $1,000.

Neither party will accept a bargain with a smaller payoff than his or her threat value. Rationality requires the parties to agree to a price between $3,000 and $4,000, as any price in that range will benefit both parties relative to noncooperation. However, the exact price on which the parties will agree is unpredictable. If Blair offers $3,100, Adam may storm away, even though accepting would leave him better off than not cooperating. Similarly, if Adam demands $3,900, Blair may refuse, even though accepting would make her better off than not cooperating.

The distribution of the cooperative surplus is unpredictable because it depends partly on psychology, not purely on rationality. Although the exact bargain is unpredictable, bargaining theory provides a useful rule of thumb. A reasonable distribution gives each player an equal share of the cooperative surplus. Applied to this case, the cooperative surplus equals $1,000, so Adam and Blair should each get $500. To divide the surplus in this way, Blair must pay Adam $3,500 for the cells. To generalize, the reasonable distribution requires each party to receive his or her threat value plus half of the cooperative surplus. 10

In game theory, an equal division of the surplus is called the “Nash bargaining solution.” 11 The Nash bargaining solution combines the economic concept of rationality and the legal concept of reasonableness.

In sum, when the player who owns a resource values it less than another player, the difference in value creates scope for a bargain. Moving resources from one person to another produces value when the person who receives the resource values it more than the person who gives it up. They can create a surplus if they can agree on its distribution. Bargaining has three elements: establish threat values, determine the cooperative surplus, and distribute the surplus. The threat values and cooperative surplus depend on rationality alone. Distribution of the surplus depends on psychology and other factors. A distribution is “reasonable” in our sense if each player receives his threat value plus an equal share of the surplus. The reasonable distribution predicts the price, although not perfectly.

In the example of Adam and Blair, how is the surplus distributed if the price equals $3,700?

In the example of Adam and Blair, explain why the price cannot fall to $2,500.

Like Blair, suppose that a third party wants empty cells. Adam receives a bid of $3,200 from the third party. How does the third-party’s bid change the threat values, the surplus from cooperation, and the Nash bargaining solution in negotiations between Adam and Blair?

Bargaining theory illuminates many aspects of law, including the choice to settle or litigate. 12 Consider this example. The state alleges that the Contamination Corporation illegally discharged toxic chemicals into a river, harming fish. The fine for doing so equals $300,000. The facts are confusing. The corporation contends that it did not discharge chemicals; even if it did discharge chemicals, they were not toxic; and even if the chemicals were toxic, they did not kill the fish.

Because of the confusing facts, neither side is confident about its prospects in court. Instead, each party believes that it has a 50 percent chance of winning (and therefore a 50 percent chance of losing). Litigating will cost each party $50,000, while settling out of court will cost nothing. Cooperation in this case means settling out of court and saving the cost of litigation. Noncooperation means going to court and spending money on litigation.

Assume that the state, like the corporation, wants more money rather than less. The state’s threat value equals its expected payoff from noncooperation. We can calculate this with math: if the state goes to court, it has a 50 percent chance of winning $300,000 and a 50 percent chance of winning nothing, and it will pay $50,000 in litigation costs. Hence, its threat value equals $100,000. By the same logic, the corporation’s threat value equals −$200,000. 13

Already, we see how bargaining theory provides guidance in settlement negotiations. The state gains by accepting any settlement offer greater than $100,000, and the corporation gains by offering a settlement up to $200,000. If the parties cooperate, they will save $100,000 in litigation costs, so the cooperative surplus equals $100,000. The reasonable settlement would give each party its threat value plus half the surplus, meaning the corporation would settle with the state for $150,000.

C. Vote Trading

The value produced by successful bargaining is often expressed in money, as in the example of Adam and Blair. Instead of money, however, bargaining in public law often involves a different currency: votes. 14 Turn on the video cameras and the legislature might resemble a high-minded debating society. Turn off the cameras and the legislature resembles Istanbul’s Grand Bazaar, with politicians trading votes the way merchants trade rugs.

Here is an example of bargaining over votes involving two members of a city council, Caleb and Dee. Caleb proposes spending more money on public schools. Dee will cast the tie-breaking vote on Caleb’s proposal, so he needs her vote to pass it. Similarly, Dee proposes spending more money on police. Caleb will cast the tie-breaking vote on Dee’s proposal, so she needs his vote to pass it. Each one would prefer for his or her proposal to pass and for the other’s proposal to fail. Will they make a deal and pass both measures? Or will they fail to agree and pass neither measure, thus maintaining the status quo?

Let’s formulate the problem in terms of the city council’s budget. Caleb proposes to raise taxes by $100,000 and to spend it on a school gym. Dee proposes to raise taxes by $50,000 and to spend it on hiring another policeman. If Caleb and Dee agree, expenditures on schools will rise by $100,000, expenditures on police will rise by $50,000, and taxes will rise by $150,000. In order to agree, Caleb and Dee must each prefer the full package of expenditures and taxes to the status quo.

Unlike the previous example, this one has a constraint: the choices are “lumpy,” not smooth. The parties cannot build a fraction of a gym for, say, $80,000. Nor can they hire a police officer and a half for, say, $75,000. With lumpy choices, an agreement may give one party a disproportionate share of the surplus, without the possibility of transferring some of it to the other party. Consequently, the parties cannot split the surplus from cooperation equally as required by the Nash bargaining solution. Even so, reasonable parties will cooperate and divide the surplus unequally among themselves.

Is there scope for a bargain if Caleb gains less from a school gym than he loses from hiring an extra policeman?

If Caleb does not get his school gym, his career will not suffer. If Dee does not get her extra policeman, her constituents will vote her out of office. Who has the upper hand in negotiations, Caleb or Dee? Can you express this idea using the language of threat values?

For Caleb and Dee to split the surplus equally, one must make a side payment to the other. Here are examples of side payments: Dee gets Caleb’s parking spot at city hall, Caleb gets Dee’s vote on a future issue, or Dee gives Caleb a bag of cash. Should law allow side payments like these?

Wisconsin law prohibits legislators from trading votes, but it permits “agreements to compromise conflicting provisions of different measures.” 15 If one measure funds schools but not police, and if the other measure funds police but not schools, does a compromise that funds both violate Wisconsin’s law?

D. Sphere of Cooperation

Vote trading pervades the institutions of public law—international bodies, legislative committees, regulatory agencies, citizen commissions, and even courts. Sometimes the law extends the sphere of trading, as when states create an international body like the United Nations and allow delegates to trade votes. Conversely, sometimes the law prohibits vote trading, as with judges on a panel deciding a case. Next, we discuss the advantages and disadvantages of extending or reducing the sphere of vote trading.

Consider the extension of the sphere of trade in private goods. Moving a resource from someone who values it less to someone who values it more increases total value. Value is maximized when the resource goes to the person who values it most. To maximize value, sellers must have access to many buyers, and vice versa. The widest sphere of cooperation encompasses all buyers and sellers, maximizing the potential gains from bargaining and trade.

To illustrate, before the Second World War, the countries of Europe imposed tariffs on the flow of goods among them. Each tariff benefited some industries in the country that imposed it, but taken as a whole tariffs prevented resources from going to their highest-value users, which harmed European economies. After the Second World War, the tariffs were gradually abolished to create a common market. Wider trading benefited all European economies (but not every individual in every country). 16

The advantage of wide trading in markets for goods and services presumably applies to politics. For centuries, the countries of Europe pursued national policies. Many of these policies benefited the enacting country and harmed other countries. The conflicts escalated out of control, resulting in devastating wars. After the Second World War, Europeans formed a political union to widen the sphere of political bargaining, just as the common market widened the sphere of economic bargaining. The European Union brought political benefits, notably peace, just as the common market brought an economic benefit, prosperity.

Like increasing the number of parties, increasing the number of issues widens the sphere of cooperation. To illustrate by a preceding example, instead of making independent decisions about schools and police, Caleb and Dee bargained across them and created a surplus. Likewise, members of Congress can create a surplus by bargaining across issues such as highways, fighter jets, food stamps, school funding, and health care. The advantages of wide scale and scope in bargaining argue in favor of global trade and government.

Another consideration, however, argues against global trade and government. An advantage of smaller states is that bargaining is easier within each one. As the sphere of bargaining gets smaller, fewer people participate, making it easier to reach an agreement. Thus, bargaining is easier in a town council than in Congress, and bargaining is easier in Congress than in the United Nations. Recently, proponents of Britain’s exit from the European Union (“Brexit”) asserted that a smaller, more homogeneous polity would be more agile in regulating business.

We will often compare the gains from wider cooperation against the costs of reaching wider agreement.

In 2002, the United States created the Department of Homeland Security, a federal agency comprising over 20 smaller agencies that used to be separate, like the Immigration and Naturalization Service and the U.S. Coast Guard. From the viewpoint of bargaining, what is the advantage of combining those smaller agencies?

The U.S. House of Representatives, which has 435 members, has a “germaneness” rule. The rule requires amendments to address the same subject as the underlying bill. The U.S. Senate, which has 100 members, has no such rule. Why?

E. Private Coase Theorem

Bargaining has transaction costs , such as renting a conference room, spending time in negotiations, and drafting an agreement. As transaction costs fall, the probability of a successful bargain usually increases. Conversely, as transaction costs rise, the probability of a successful bargain usually decreases.

To illustrate, assume that a nightclub cannot operate after midnight unless a neighbor waives her right to quiet. By operating after midnight, the nightclub would earn $500, and the neighbor would suffer a loss from noise that she values at $100. If the neighbor and the nightclub owner cannot bargain—perhaps they speak different languages, or perhaps they are engaged in a bitter divorce—then the nightclub will close at midnight. If they can bargain, the nightclub could pay the neighbor for permission to operate, say, $300. Consequently, the neighbor would net $200 ($300 in cash less $100 in harm from noise), and the nightclub would net $200 ($500 in earnings less $300 paid to the neighbor). Both parties prefer this deal to no deal.

In this example, the nightclub and the neighbor reach a private agreement in which one pays the other to waive her right to quiet. Bargaining achieves mutual gain by allocating the legal entitlement—control over noise after midnight—to the party who values it more, the nightclub. If the transaction costs of bargaining are zero, we expect parties like the nightclub and the neighbor to reach such agreements.

In one of the most famous law articles of all time, Ronald Coase discussed examples like this one. 17 Commentators formulated his arguments as the Coase Theorem . 18 The theorem asserts that bargains will allocate legal entitlements to the parties who value them most, provided that transaction costs do not impede the bargaining process . The theorem is positive, meaning it makes predictions about how people behave.

The Coase Theorem deserves much thought and discussion. Consider one of Coase’s examples. Imagine two neighbors, a farmer who grows corn and a rancher who keeps cows. Without a fence, the cows will trample the corn, causing $50 in damage. A fence will prevent trampling. The farmer can fence the cows out of the crops, or the rancher can fence the cows inside the pasture. It costs the farmer $10 to fence the cows out, and it costs the rancher $20 to fence the cows in. The difference in fencing cost is due to the shorter perimeter of the farm and the longer perimeter of the ranch.

Who will build the fence? If the legal rule is “open range,” meaning the rancher is not responsible for damage caused by the cows, then the farmer will build the fence. The farmer would rather pay $10 for a fence than lose $50 in trampled corn.

What if the rule is “closed range,” meaning the rancher is liable for damage caused by the cows? One might expect the rancher to build the fence, which costs him $20. But Coase showed that this behavior is irrational, so the prediction may be wrong. The farmer can build the fence for $10. If the transaction costs of bargaining are zero, the farmer and rancher will strike a deal under which the rancher pays the farmer to build the fence. For example, the rancher might pay the farmer $15. After building the fence, the farmer would gain $5 ($15 from the rancher, minus $10 to build the fence), and the rancher would spend $15, which is better than spending $20 to build the fence himself—and much better than paying $50 in damages for trampled corn.

Bargaining theory makes this reasoning precise. If the rule is closed range, and if the parties do not cooperate, the rancher pays $20 for the fence and the farmer pays $0. The noncooperative value of the game is the sum of these threat values, −$20. If the parties cooperate, the rancher pays some amount to the farmer, call it x , and $0 for the fence. The farmer receives x from the rancher and pays $10 for the fence. The cooperative value of the game is the sum of the parties’ payoffs when they cooperate: − x + x − $10 = −$10. The cooperative surplus is the difference between −$10 and −$20, which is $10. 19 If the parties agree to a reasonable division of the surplus, the rancher pays the farmer $15, and the farmer builds the fence. 20

In this example, the farmer can build at lower cost and bargaining leads him to do so, regardless of the legal rule. If transaction costs are zero, the farmer builds whether the legal rule is open range or closed range. What happens when high transaction costs prevent bargaining? Without exchange, the law’s initial allocation of rights is the final allocation. If the rule is open range, the farmer will build the fence at a cost of $10. But if the rule is closed range and high transaction costs preclude a bargain, the rancher will build the fence at a cost of $20.

Similarly, consider the nightclub example when bargaining fails. Given failed bargaining, the club owner and the neighbor enforce their rights rather than exchanging them. The law could give the nightclub the right to play music, in which case it will earn $500 and the neighbor will lose $100. Or the law could give the neighbor the right to quiet. In that case, assuming no bargaining, the nightclub owner will forego earning $500 and the neighbor will avoid harm of $100.

Examples like these illustrate an important generalization. When transaction costs are zero, law affects distribution but not production. If the nightclub and the neighbor can bargain easily, the law does not affect whether the nightclub operates and creates net $400 in value (it does). The rule only affects the parties’ payoffs. Conversely, when transaction costs are high, law determines distribution and production . 21 If the nightclub and the neighbor cannot bargain, the law determines whether the nightclub operates, and it determines the parties’ payoffs.

In the preceding example, suppose the legal rule is “open range,” meaning the rancher is not liable for harm caused by the cows. Will the parties bargain over who builds the fence? Why or why not?

Suppose building the fence would cost the farmer $18 instead of $10 and the legal rule is “closed range.” Everything else in the example remains the same. In negotiations between the farmer and the rancher, what is the Nash bargaining solution?

In the nightclub example, what are the payoffs to the club owner and the neighbor if the transaction costs are high and the club has a right to play music? What are the payoffs if the transaction costs are high and the neighbor has a right to quiet?

Apartment owners in New York City discovered plans to build a tower next door. The tower would block their views of the Empire State Building. The owners paid $11 million to buy the “air rights” to the neighboring lot, preventing the construction of the tower. 22 Who had the law on their side, the owner of the lot or the owners of the apartment? Was building the tower efficient?

Do parties actually bargain as the Coase Theorem implies? Robert Ellickson studied interactions between farmers and ranchers in Shasta County, California. 23 The legal rule varied between open and closed range. Ellickson found that changes in the law did not affect fencing decisions, just as the Coase Theorem would predict when transaction costs are low. However, the parties did not explicitly bargain around the law. Instead, they obeyed social norms, according to which ranchers kept their cows under control to avoid negative gossip and injury to their animals.

This research led to a vigorous inquiry by economists into the evolution of social norms. In general, informal social norms and formal legal rules can increase production and solve distribution problems. When the transaction costs of social interactions are low, social norms may produce good results with little help from formal law. For example, family firms whose members are in close social relationships may not need much help from formal law to coordinate their behavior. However, when transaction costs of social interactions are high, social norms may produce bad results unless helped by formal law. For example, real estate transactions involve such large sums of money that informal mechanisms like reputation and boycott cannot prevent wrongdoing. Buying a house involves a complicated ritual. In general, failures in social norms require legal remedies, just as failures in markets require regulatory remedies. 24

F. Public Coase Theorem

The Private Coase Theorem concerns bargains over private goods—fences, insurance, computers, cars, and so on. What about bargains over public laws? Bargaining over laws occurs among executives, legislators, regulators, administrators, committee members, commissioners, lobbyists, interest groups, and even some judges. Like collectors trading stamps, lawmakers trade support to benefit themselves. Consequently, we can reformulate the Coase Theorem for application to public laws. The Public Coase Theorem asserts that as the transaction costs of bargaining among lawmakers approach zero, they will cooperate with each other and allocate public entitlements to the lawmakers who value them the most . To illustrate by the example of Caleb and Dee, if transaction costs are sufficiently low, they will trade votes and provide greater funding for their preferred programs, schools and police.

To clarify the theorem, consider one more example. Caleb and Dee gain by pushing their legislation on schools and police through the city council. Expressed in money, Caleb gains $100,000 and Dee gains $50,000. In contrast, Graham, a third member of the city council, opposes the proposals. Expressed in money, Graham will lose $250,000 if the proposals get enacted. Thus, enacting the proposals would create a net loss of $100,000. If the transaction costs of bargaining are zero, Graham will pay Caleb and Dee not to enact their legislation. For example, he could do a favor for Caleb (e.g., vote for a future bill) valued at $140,000 and a favor for Dee (e.g., appoint her to a powerful committee) valued at $60,000. Caleb and Dee prefer Graham’s offers to enacting their proposals. And Graham prefers his offers, which cost him $200,000, to enacting the proposals, which would cost him $250,000. 25 All parties are better off. Instead of enacting the proposals and destroying $100,000 in value, the parties bargain to a mutually beneficial outcome.

In this example, three officials bargain to benefit themselves, but what about their constituents? Do citizens benefit when their leaders cut deals? We will return to this question later in the chapter.

Taken together, the private and public forms of the Coase Theorem have an implication for lawmaking: private bargains and public laws often substitute as solutions to problems of cooperation. Consider the example of the noisy nightclub and the neighbor. If they can bargain privately, they will cooperate by making a private agreement—say, the nightclub pays the neighbor, and the neighbor does not complain about noise. If they cannot bargain privately, the neighbor may demand noise restrictions from the city council.

Here is another example. Emily owns a cement factory, and Frank owns an adjacent farm. Dust from Emily’s factory contaminates Frank’s crops, and Frank’s tractors congest the road, impeding Emily’s trucks. If the transaction costs of private bargaining are low, Emily and Frank may strike a deal under which Emily reduces dust and Frank reduces congestion. If the transaction costs of private bargaining are high and the parties fail to reach an agreement, Frank may demand pollution regulations and Emily may demand congestion regulations.

These examples yield a generalization: successful private bargaining decreases the pressure for new laws, and failed private bargaining increases the pressure for new laws . To illustrate, consider a Supreme Court case called Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission . 26 A gay couple asked a baker to make a cake for their wedding. The baker refused because of his religion. Does the couple’s right to equal treatment trump the baker’s right to (discriminatory) religious beliefs? The answer depends on the meaning of the Constitution, which is contested. If the couple and the baker had resolved their disagreement privately, the Supreme Court would not have gotten the case. In fact, the parties failed to resolve their disagreement, so the Supreme Court got the case. The baker won. We will say more about this case later in the book.

Beginning in 2018, the U.S. government “shut down” for 35 days because Congress and the President could not agree on immigration policy. After the President relented, a bill to reopen the government passed in Congress within hours. 27 Use the Public Coase Theorem to analyze the shutdown.

During his first term, President Barack Obama threatened to veto bills containing “earmarks,” spending measures tacked onto other legislation, like a $500,000 grant to the Teapot Museum. 28 Throughout Obama’s presidency, Congress found it difficult to compromise. 29 Can you relate the President’s threat to compromising in Congress?

In a monetary economy, people trade with money, as when the nightclub pays the neighbor in cash. In a barter economy, people trade with goods and services, as when the nightclub pays the neighbor by giving her free admission to concerts. Does bargaining among legislators resemble a monetary or barter economy? Which economy has higher transaction costs?

Rod Blagojevich, the former governor of Illinois, was convicted of 18 crimes. His most sensational crime involved the U.S. Senate. When Barack Obama left the Senate to become President of the United States, Blagojevich had the power to name his replacement (Obama was a Senator from Illinois). Blagojevich offered the Senate seat to an Obama ally in exchange for money or a position in Obama’s Cabinet, like Secretary of Labor. Obama refused, and Blagojevich was convicted of extortion and corruption.

Blagojevich appealed his convictions, and he succeeded on one count. The instructions to the jury did not distinguish Blagojevich’s demand for money from his demand for a Cabinet appointment. Jurors were told that both demands were prohibited. However, a federal court disagreed, holding that the two demands were “legally different: a proposal to trade one public act for another, a form of logrolling, is fundamentally unlike the swap of an official act for a private payment.” 30 The court continued:

[A] quid pro quo [occurs when] a public official performs an official act (or promises to do so) in exchange for a private benefit, such as money. . . . A political logroll, by contrast, is the swap of one official act for another. Representative A agrees with Representative B to vote for milk price supports, if B agrees to vote for tighter controls on air pollution. A President appoints C as an ambassador, which Senator D asked the President to do, in exchange for D’s promise to vote to confirm E as a member of the National Labor Relations Board. Governance would hardly be possible without these accommodations, which allow each public official to achieve more of his principal objective while surrendering something about which he cares less, but the other politician cares more strongly. A proposal to appoint a particular person to one office (say, the Cabinet) in exchange for someone else’s promise to appoint a different person to a different office (say, the Senate), is a common exercise in logrolling. We asked the prosecutor at oral argument if, before this case, logrolling had been the basis of a criminal conviction in the history of the United States. Counsel was unaware of any earlier conviction for an exchange of political favors. Our own research did not turn one up. It would be more than a little surprising to Members of Congress if the judiciary found in [federal criminal law] a rule making everyday politics criminal. 31

Blagojevich spent many years in prison, but not for demanding a position in Obama’s Cabinet. That conviction was overturned. Did the court make the right decision? Is logrolling just “everyday politics?”

G. Coase Theorem as a Rule of Thumb versus Law of Nature

To put our discussion of the Coase Theorem in perspective, we contrast rules of thumb and laws of nature. To make a simple generalization, the Coase Theorem extends the meaning of “transaction costs” to encompass all obstacles that cause bargaining to fail. By this definition, bargaining must succeed as transaction costs approach zero, so the theorem becomes true by definition. A proposition that is true by definition of its words is a tautology, like “all husbands are married.” Regarded as a tautology, the Coase Theorem is a truth about language. 32

Alternatively, regarded as a factual proposition, the Coase Theorem is a rule of thumb about behavior. As transaction costs fall, more extensive bargaining is easier and agreement is more likely. However, some obstacles to bargaining are persistent and agreement is never certain.

What obstacles to bargaining are persistent? Strategy is one. The best move by one player in a bargaining game often depends on another player’s strategy, and vice versa. 33 Strategy is the essence of games among people. Instead of having simple solutions, strategic games are usually complicated, as everyone who watches sports or chess knows. By treating strategy as a transaction cost, the Coase Theorem reduces complicated game theory to what economists call “price theory,” which is much simpler. This simplification makes the Coase Theorem useful.

To illustrate, contrast price taking and price making. 34 Shoppers who purchase milk at the listed price in a grocery store are price takers. Price taking is relatively simple and determinate. In contrast, a buyer of a used car makes a price by negotiating with the seller. Price making involves strategic behavior, which is hard to model and predict.

The Coase Theorem is a rule of thumb because its assumptions eliminate strategy, which simplifies the analysis while remaining approximately accurate. Bargaining usually succeeds as transaction costs approach zero, but not always. The Coase Theorem is not a law of nature like Newton’s law of universal gravitation.

II. Normative Theory of Bargaining

Like collectors trading coins, lawmakers trade votes for mutual gain. Throughout the institutions of public law—international bodies, legislative committees, regulatory agencies, citizen commissions, and even courts—bargaining benefits the participants. However, parties to bargains in public law are mostly officials, not citizens. Is political bargaining good or bad for the public? Earlier we explained that bargaining produces and distributes value. Efficiency and distribution are two policy values that influence politics and dominate economics. We can use them to assess political bargaining.

A. Efficiency

As formulated earlier, the Coase Theorem makes a positive prediction: bargains will allocate legal entitlements to the parties who value them the most, provided that transaction costs do not impede the exchange. Now consider this prediction’s normative significance. When entitlements belong to the people who value them the most, their allocation is efficient . Consequently, the Coase Theorem can be restated in terms of efficiency: bargaining allocates legal entitlements efficiently among the bargainers when transaction costs are zero.

To illustrate by the jail example, bargaining moves entitlement to the empty cells from Adam, who values them less, to Blair, who values them more. After movement stops, Adam and Blair have the entitlements that they value most. Consequently, the allocation is efficient with respect to Adam and Blair. 35

Earlier we explained that public laws and private bargains are substitutes. We can restate this fact as a matter of efficiency. A change from inefficient to efficient allocation of legal entitlements creates a surplus. Public laws or private deals are alternative means to achieve that surplus. The efficient approach depends on transaction costs. If transaction costs of public bargaining are lower than private bargaining, new law is the efficient means of achieving the surplus. Conversely, if transaction costs of public bargaining are higher than private bargaining, private agreements are the efficient means of achieving the surplus.

Most people agree that efficiency is better than inefficiency. Politicians coo about the need for efficiency like pigeons around a slice of bread. State officials never publicly advocate wasting money. In contrast to efficiency, there is disagreement about distribution among politicians, as well as among lawyers, economists, and the general public. Later we will say more about distribution.

B. Representation

Bargains in public law promote efficiency among the officials who make them. What about everyone else? Is political bargaining good or bad for the public? To answer this question, we extend the scope of the Public Coase Theorem. If political bargaining were costless, then everyone could join the bargain. If everyone joins the bargain, then everyone can share in its benefits. Every law creating more benefits than costs will get enacted. When every law creating more benefits than costs gets enacted, political outcomes are “socially efficient.” We can restate the Public Coase Theorem in terms of social efficiency. As the transaction costs of political bargaining approach zero, laws will become socially efficient .

To illustrate, assume again that Caleb and Dee gain by pushing their legislation on schools and police through the city council. In contrast, Graham, the third member of the city council, loses. Assume that legislating requires a majority among the three of them. Consider two possible consequences. First, if Caleb and Dee gain more from the legislation than Graham loses, then Graham cannot pay Caleb and Dee enough to withdraw their legislation. They will enact the legislation, as social efficiency among the three of them requires. Second, if Caleb and Dee gain less from the legislation than Graham loses, then Graham can pay Caleb and Dee enough to withdraw their legislation. They will withdraw the legislation, as social efficiency among the three of them requires.

Suppose Graham is not a member of the city council but a private citizen. The logic works the same way. If bargaining is costless and the legislation is socially efficient for the three of them, Caleb and Dee can offer Graham something of value in exchange for his agreement not to impede their proposals. For example, they can offer to hold a hearing on legislation Graham favors in exchange for his agreement not to disrupt city council meetings. If the legislation is inefficient, Graham can offer Caleb and Dee something in exchange for withdrawing their proposals.

Legislation usually affects many citizens, not just one like Graham. Costless bargaining implies that all lawmakers and all citizens can negotiate, and they will agree to the socially efficient package of laws. No law gets enacted unless its benefits exceed the costs.

In reality, the transaction costs of bargaining among large groups are usually high, not low. Consequently, citizens cannot bargain with one another over public laws. Instead, officials bargain on their behalf. In a democracy, lawmakers should represent the citizens. Representative lawmakers ideally strike the same bargains that citizens would strike if the transaction costs among citizens were not prohibitive. This leads to another restatement of the Public Coase Theorem: As the transaction costs of political bargaining among representative lawmakers approach zero, laws will become socially efficient . Representation is an important and complicated topic that we will return to in later chapters.

If the transaction costs of bargaining were zero, would we need city councils? Can you relate your answer to the Massachusetts law according to which small towns hold open meetings at which private citizens make laws? 36

Lawmakers sometimes want to enact proposals that would benefit them (e.g., higher salaries, more vacation) but hurt private citizens more. In a democracy, what can private citizens offer legislators in exchange for their agreement to withdraw such proposals?

If bargaining between citizens and lawmakers promotes efficiency, why do bribery laws prohibit citizens from paying lawmakers to vote a particular way?

The Voting Rights Act of 1965 is a landmark in American law. By removing racist barriers to voting, it vastly improved the ability of African Americans to elect their preferred candidates to office. 37 But did electing preferred candidates actually empower racial minorities? Consider the U.S. Congress, which has 535 members and operates under majority rule. One might wonder if adding a few representatives of a minority group, or even a few dozen representatives, will change legislative outcomes in Congress. James Madison, one of the Framers of the Constitution, wrote, “If a majority be united by a common interest, the rights of the minority will be insecure.” 38

Bargaining theory shows how even a small minority can exercise power in a majoritarian system. Legislators can trade their votes on issues they do not care about in exchange for votes on issues they do care about. In this way, a few legislators might ensure passage of a bill that their constituents value highly. As the transaction costs of bargaining approach zero, this will happen every time the value to those constituents (even if they are few in number) exceeds the costs to others (even if they are many in number).

By making it possible for minorities to win seats in Congress, the Voting Rights Act facilitated bargaining between them and the majority. Furthermore, as more seats were won by minorities, they gained more bargaining power. Of course, transaction costs always exceed zero, and minority groups may still exercise too little power. But they exercise more power than they would if bargaining among members of Congress were prohibited.

C. Distribution and Social Welfare

People mostly agree on the value of efficiency but disagree on distribution. Some argue that more equal distribution of society’s wealth is better than less, and others argue the opposite. In the nightclub example, operating after midnight generates $400 in surplus. Some would argue that sum should go to the neighbor, others would argue it belongs to the nightclub. People who stand to gain from redistribution especially disagree with people who stand to lose from it. Thus, the neighbor who stands to gain from a right to quiet is likely to favor that right, whereas the nightclub that stands to gain from a right to make noise is likely to favor that right.

Since people disagree about distribution, they also disagree over how much efficiency they would sacrifice for more equality. In the nightclub example, suppose the neighbor is poor and the nightclub is rich. Assuming no bargaining between them, the right to quiet will save the poor neighbor $100 at a cost of $500 to the rich club. Is this worthwhile? People will disagree.

Many clashes in public law trace to two questions: How much equality should we seek, and how much efficiency should we sacrifice to achieve it? Disagreements about efficiency and distribution relate to how they are valued. Economists often discuss their value in terms of utility . Utility refers to an individual’s well-being, which depends on the things that matter to her, like health, family, social standing, and the fit between her preferred laws and actual laws. As a person’s well-being grows, her utility increases.

Like health, money increases utility. However, most economists believe it does so at a declining rate. A check for $100,000 grows the utility of a homeless person by more than it grows the utility of a billionaire. Thus, transferring money from one person to another does not change the total wealth, but it might change the total utility.

To illustrate, add some details to the nightclub example. Suppose the neighbor is a struggling writer, and the club’s noise distracts her. Operating earns the club $500 and costs the neighbor $100 from late work. If the nightclub operates, value equal to $400 gets produced. How that money gets distributed does not affect the sum—the surplus always equals $400—but it might affect utility. Transferring more of the cooperative surplus to the poor neighbor may increase her utility by more than it decreases the utility of the nightclub’s rich owner.

To transfer utility, the law can change the rights underlying the bargain. By granting the neighbor a right to quiet, the law forces the nightclub to pay the neighbor for the right to make noise. Given our assumptions, a payment from the club costs the owner less utility than the neighbor gains. Thus, granting the neighbor a right to quiet generates more utility than granting the nightclub a right to operate.

This conclusion, however, depends on measuring the utility of different people and adding them. There is no generally agreed upon or accepted way to measure and compare the utility of different people. Many agree that social welfare increases with individual utility, but most disagree about the rate of increase. These disagreements reflect political and moral philosophy more than social science. 39

In California, limousines pass homeless camps, and private jets fly over impoverished neighborhoods. In Brazil, the six wealthiest people have as much money as the 100 million poorest people. 40 The world features profound inequalities in wealth. Many people believe that we could increase social welfare by moving money from the rich to the poor. How should we move the money?

We could reallocate rights. To explain this idea, recall the rich nightclub and the poor neighbor. Suppose we grant neighbors a right to quiet. This forces the club to pay the neighbor for permission to play music, transferring money from rich to poor.

In this example, giving the neighbor a right to quiet redistributes money from rich to poor. But what about down the block, where another nightclub is poor and its neighbor is rich? Here the right to quiet transfers money from poor to rich. To generalize, redistributing wealth through the legal system often requires relying on crude averages, like the typical wealth of nightclubs and the typical wealth of their neighbors. 41

Reallocating rights can cause another problem. Suppose an entrepreneur chooses between two activities, opening a nightclub and opening a doughnut shop. The nightclub would create $500 in value for the entrepreneur and $100 in losses for the neighbor. The doughnut shop would create $250 in value for the entrepreneur and no losses for anyone. Efficiency requires the entrepreneur to open the nightclub (net value of $400 instead of $250). If the government grants the neighbor a right to quiet, the entrepreneur will have to pay the neighbor for permission to operate. This might cost say, $300, meaning the club’s profit shrinks to $200. The entrepreneur prefers $250 to $200, so she opens the doughnut shop. The doughnut shop is the best choice for the entrepreneur but not for society. To generalize, reallocating rights causes inefficiency by distorting people’s choices.

Instead of reallocating rights, we could tax the rich and transfer the revenue to the poor. A tax-and-transfer system avoids the problem of crude averages. We can tax rich nightclub owners, not all nightclub owners. Likewise, taxes cause fewer distortions. 42 To see why, suppose that instead of reallocating rights to the neighbor we require the entrepreneur to pay a 10 percent tax. If the entrepreneur opens the nightclub, her after-tax profit equals $450. If she opens the doughnut shop, her after-tax profit equals $225. So she opens the club. The tax leads to the efficient choice (open the nightclub), whereas reallocating the right leads to the inefficient choice (open the doughnut shop).

This discussion makes taxes sound better. However, running a tax system is not cheap. We must identify the rich, assess tax bills, collect the money, identify the poor, and transfer the money. Every step requires people (accountants, lawyers, tax collectors) and resources. The Internal Revenue Service, which collects federal taxes in the United States, employs over 70,000 people and has an annual budget of about $12 billion. According to one study, about one-third of each marginal dollar of taxes goes to waste. 43

Most law-and-economics scholars prefer to redistribute money through the tax system, not through legal entitlements. They believe that taxes cost less and create fewer distortions all things considered. Of course, not everyone agrees. 44

III. Bargaining Failures

We have explained the positive and normative theory of bargaining. The underlying generalization is that low transaction costs facilitate private and public bargains for mutual gain. As discussed, bargaining sometimes succeeds and sometimes fails. A good theory of bargaining diagnoses the cause and cure of failures, like a good doctor diagnoses the cause and cure of a disease. We will sketch theories of bargaining failure based on economic theories of market failure. These theories connect the cause of bargaining failure to its cure.

Economists often divide market failures into three categories: externalities, asymmetrical information, and monopoly. These labels capture problems that public law aims to overcome. Economists have spent decades studying these impediments to cooperation. We will discuss each briefly.

A. Externalities, Public Goods, and Free Riding

In 1948, a toxic fog descended on the town of Donora, Pennsylvania, killing 20 residents and sickening thousands. 45 Emissions from industrial plants contributed to the disaster. In economic terms, the smog was a negative externality . A negative externality exists whenever an actor’s decision excludes a cost that he imposes on others. In the case of Donora, plant owners apparently did not consider the harm their pollution caused to nearby residents. If plant owners had considered those costs when making decisions, they would have polluted less. Negative externalities lead to inefficiently high levels of pollution.

To see the logic clearly, attach some numbers to Donora. Suppose a plant owner earns money by operating. Expressed in utility, the money is worth 10. Expressed in utility, the cost to the owner of breathing the dirty air equals 4, and the cost to everyone else equals 12. If the owner takes all costs into account, he will not operate. He would prefer not operating and getting zero to operating and getting −6 (10 from profit, −4 from his breathing dirty air, −12 from others breathing dirty air). If the owner externalizes the costs to others, he will operate. He prefers operating and getting 6 (10 from profit, −4 from his breathing dirty air) to not operating and getting zero. Negative externalities lead people to engage in inefficient activities.

Negative externalities relate to the problem of free riding . To understand free riding, consider how a polluter might reason: “If many factories reduce pollution, the air will be clean whether or not I reduce my pollution. If few factories reduce pollution, the air will be dirty whether or not I reduce my pollution. My abatement matters little to air quality, so I will not spend money reducing my pollution.” Each polluter reasons this way. Thus, each polluter waits for others to abate, no one reduces pollution, and the air gets dirtier. Negative externalities cause free riding on abatement by others.

Unlike polluting, some activities have a positive externality . Positive externalities are the opposite of negative externalities. Imagine a stateless village preyed upon by bandits. For protection, the community could ask hundreds of volunteers to build a stone wall around the village. Anyone who volunteers creates a benefit for himself and others in the village. The benefit to others is the positive externality.

Like negative externalities, positive externalities can lead to free riding. A villager might reason, “If many people volunteer, the wall will get built whether I haul stones or not. If few people volunteer, the wall will not get built whether I haul stones or not. My participation does not matter to my safety, so I will stay home and relax.” A villager who reasons this way free rides on others’ efforts. If most people reason in this way, everyone stays home. The wall does not get built even though its benefits exceed its costs. When a decision maker is not paid for the positive externalities of his activity, there is usually too little of the activity.

Specific characteristics cause free riding. If you take a bite from a sandwich, there is less for me. If you drive the car, then I cannot drive it at the same time. Sandwiches and cars are rivalrous . Consumption uses up rivalrous goods, preempting their use by others. In contrast, we can breathe air simultaneously without exhausting the supply. Similarly, architects have used the Pythagorean Theorem for two millennia, and just as much remains as before. Air and geometry are non-rivalrous .

Besides rivalry, consider excludability. I can exclude you from driving my car by locking it, whereas I cannot easily exclude you from breathing air. Similarly, preventing someone from using your idea is harder than preventing someone from biting your sandwich. Cars and sandwiches are excludable while air and ideas are non-excludable .

We can apply these concepts to our village wall. The security it provides is non-rivalrous because everyone in the village can enjoy it at once, and it is non-excludable because no one in the village can be omitted from its protection. Non-rivalry and non-excludability are the characteristics that define a public good in economics. 46 Radio broadcasts and national security are standard examples of pure public goods. In contrast, rivalry and excludability characterize private goods . Pure private goods include bananas, bicycles, and bedrooms. In fact, many goods have characteristics of both public and private goods. Examples of mixed goods include roads and schools.

The public characteristics of a good cause free riding. For the villager, non-rivalry means there is plenty of protection to go around, and non-excludability means he can enjoy that protection whether he hauls stones or not. So he stays home and relaxes. If the wall did not have positive externalities—if the villager did not benefit when others haul stones—he could not free ride on others’ efforts.

Like positive externalities, negative externalities cause free riding. To see why, return to Donora. The smog harmed thousands of residents. The dirty air was non-rivalrous (all could breathe it simultaneously) and non-excludable (no one in Donora could avoid it). Residents might have proposed this deal with the industrialists: “Rather than polluting and earning $1 million, stop polluting and we will pay you $2 million.” This bargain would benefit residents and industrialists alike. However, all residents would benefit, and this would lead to free riding. Residents would wait for others to contribute to the $2 million payment just like villagers would wait for others to haul stones. Free riding by nonpaying residents would prevent the bargain from taking place.

Generalizing from events like Donora, some economists connect free riding to the origins of the state. Protection and defense provide opportunities to free ride, and free riding prevents private individuals from cooperating over security and other public goods. The state arises as a solution. Thus, we can interpret many public laws and the legal institutions (legislatures, courts) that produce them as solutions to free riding.

The prisoner’s dilemma is a paradigm in social science for situations where individual rationality causes mutually destructive behavior. Police arrest Mr. Byrne and Mr. Char for jointly setting a building on fire. After being placed in separate interrogation rooms, each suspect faces a choice: confess to the crime or remain silent. If both confess, both will spend five years in prison. If neither confesses, both will spend one year in prison. If one confesses and the other does not, the confessor will spend only six months in prison—a reward for helping the police—and the non-confessor will spend seven years in prison. Figure 2.1 summarizes the facts.

The Prisoner’s Dilemma

What should each suspect do? If Mr. Char confesses, then Mr. Byrne can either confess and face five years in prison or stay silent and face seven years in prison. So he prefers to confess. Alternatively, if Mr. Char stays silent, then Mr. Byrne can either confess and spend six months in prison or stay silent and spend one year in prison. So he prefers to confess. Regardless of Mr. Char’s choice, Mr. Byrne is better off if he confesses. The same logic applies to Mr. Char, so he will also confess. The best strategy for each individual leads to a bad outcome for both of them.

In the payoff matrix, “confess” means “don’t cooperate” and “stay silent” means “cooperate.” Can you use the prisoner’s dilemma to analyze the failure of the villagers to build a stone wall?

Informal enforcement mechanisms such as social pressure can prevent a little free riding. If pollution harms only a few people (law calls this a private nuisance), each of them may chip in and pay the industrialist to abate. Each one chips in to avoid being ostracized by the group.

Alternatively, if pollution harms thousands of people (law calls this a public nuisance), private bargaining seldom succeeds. Correcting a public nuisance usually requires public law. In the example involving a stone wall, law could prevent free riding by taxing villagers who do not help build. In Donora, the Clean Air Acts could have prevented the toxic fog.

For the state to correct free riding among citizens, lawmakers must overcome free riding themselves. 47 This can be difficult. To illustrate, assume that Helen and Ike are congressional representatives from Michigan where cars get made, and they care intensely about an automobile bill in Congress. Assume that votes on the bill are equipoised, with the same number in favor and against. To enact the bill, the Michigan representatives need to trade a vote with a representative from New York, who cares intensely about a banking bill. Helen may hold back in the hope that Ike will shoulder the burden of trading for the needed vote. Ike may do the same. If both of them hold back, the bargain will never take place. Free riding by private actors causes inefficiency, and free riding by public actors may prevent the state from correcting it.

Since free riding impedes bargaining, it can be described as a transaction cost. Thus, the Public Coase Theorem can be restated: bargaining can overcome externalities if low transaction costs mitigate free riding. With private nuisances (small numbers of people), social norms may mitigate free riding. With public nuisances (large numbers of people), legislation is usually necessary to mitigate free riding by the citizens. However, legislating may require overcoming free riding by the officials who make laws.

A factory in Northfield, Minnesota, makes the town smell like popcorn and chocolate. The smell is a positive externality. Explain how this positive externality can lead to inefficiency. Does the factory operate too much or too little?

Imagine a two-by-two matrix with columns labeled “rivalrous” and “non-rivalrous” and rows labeled “excludable” and “non-excludable.” In which box would the following goods fit: parking spaces, fish stocks in international waters, broadband internet access, FM radio, satellite radio? 48

Some kinds of information are public goods. For example, music is non-rivalrous and, given the ease of copying and sharing, largely non-excludable. Explain how free riding could affect music sales and music production. Can you think of any laws that mitigate free riding in music?

The theory of public goods justifies many state actions, but some doubt that it explains the genesis of the state. Under what circumstances will private individuals fail to cooperate in providing a public good but succeed in cooperating to form a state? 49

The Articles of Confederation established a central government for the United States after the colonies declared their independence from Great Britain. But the Articles only lasted for a few years, in part because of money. Under the Articles, the central government could request funding from the states, but the Articles provided no mechanism to force the states to pay their assigned shares. Some states did not pay, apparently hoping that payments from other states would keep the central government afloat. The nonpaying states were free riding.

Without income, the central government could not finance a military to protect the states from foreign aggressors. This failure convinced people that the central government needed more authority. In 1787, the Philadelphia Convention drafted the U.S. Constitution, adoption of which required support from nine of the 13 states. A year later the Constitution took effect, replacing the Articles of Confederation. The Constitution made important changes that get attention, like creating the presidency and protecting individual rights. Critically, it also empowered the federal government to raise money, first through tariffs and later through the income tax. This mitigated the problem of free riding. When war erupted in 1812, the United States had a powerful navy.

B. Information Asymmetry

On September 11, 2001, Al Qaeda terrorists destroyed the World Trade Center in New York City and killed almost 3,000 people. The United States accused Iraq of aiding Al Qaeda and stockpiling chemical, biological, and nuclear weapons. Iraq denied terrorism and permitted only limited inspections of its military facilities. Diplomacy failed and the United States invaded Iraq in 2003, overthrowing a dictatorial government but finding no ties to Al Qaeda or weapons of mass destruction. If the United States had known the facts, it might not have threatened war, and if Iraq had known the United States would invade, it might have allowed inspections. Misinformation causes miscalculations, and miscalculations cause bargaining to fail. The following pages explain why.

In our opening example, we considered the case of Adam and Blair trading money for jail cells. We assumed that each knew his or her own threat value ($3,000 in the case of Adam, $5,000 for Blair). In fact, parties often have incomplete information about their own threat values. Misinformation causes mistakes in bargaining. To demonstrate, most scientists agree that global temperatures will rise over time, but they disagree on the rate, cost, and amount attributable to human activity. This makes legislators uncertain about the value of regulating greenhouse gases. Without good information, legislators may deregulate greenhouse gases and then find the effects are worse than expected.

Aside from imperfect science, bills are often so complicated that legislators cannot comprehend their full effects. In 2014, Congress passed a single bill exceeding 1,500 pages in length that authorized $1 trillion in spending on child immigrants, disease in Africa, drought, gun control, sales taxes, campaign finance, museums, the transfer of detainees from an American military base in Guantanamo Bay, Cuba, and so forth. When bargaining, each legislator understood some of the bill’s details, and no legislator understood all of them.

In these examples, parties must gather costly information to determine their own threat values. A different problem arises for determining the threat values of other people. Suppose the President negotiates with Congress over an immigration bill. If the President and Congress agree, they can change the number of immigrants allowed by law. Congress would prefer to admit, say, up to 500,000 additional immigrants, whereas the President would prefer to admit, say, up to 200,000 additional immigrants. Since both prefer additional immigrants, there is scope for cooperation. Suppose the President offers to admit up to 200,000 additional immigrants, but Congress thinks the President is actually willing to accept up to 300,000 additional immigrants. Thus, Congress holds out for admitting more immigrants, and bargaining with the President fails.

If Congress knew that the President would only accept 200,000 additional immigrants, it would accept the President’s offer. In the example, the President knows his own preferences, but Congress does not. Information asymmetry means one player knows something the other does not know. In this example, information asymmetry blocks bargaining.

Players withhold information about their threat values to gain a strategic advantage. To see this clearly, consider Adam and Blair. Adam values the jail cells at $3,000 and Blair values them at $4,000, meaning a successful bargain will create $1,000 in surplus. Price determines the distribution of that surplus. If Adam reveals his threat value, Blair may offer him $3,001, meaning he gets just $1 of the surplus. If he withholds the information—if he bluffs and says he values the cells at $3,900—she may offer him a lot more. Adam has an incentive to exaggerate his threat value. Blair has a similar incentive. Asymmetrical information persists partly because of strategic behavior. However, it can cause miscalculation and failure to agree. 50

The problem of verification exacerbates information asymmetry. Suppose that the President truthfully declares that he prefers to admit up to 200,000 additional immigrants, but no more. Recognizing the powerful incentive to bluff, the Congress may not believe him. How could the President verify his statement and make Congress believe him? That would be as hard as Adam proving to Blair that he values the empty jail cells at $3,000. Choices are observable but preferences are unobservable. Because they are unobservable, preferences are unverifiable.

Suppose Congress and the President agree on an immigration deal. Another problem looms: Will they follow through? Will Congress pass the bill as promised or renege and embarrass the President? Will the President sign as promised or veto? If either party expects the other to back out, they will not bother bargaining in the first place. The parties can make promises to one another, but talk is cheap. 51 To facilitate bargaining, making false promises must be costly.

The costliness of a false promise can be understood through the idea of credible commitments . A credible commitment forecloses an opportunity. In a classical book on the art of war, the Chinese philosopher Sun Tzu wrote, “When your army has crossed the border, you should burn your boats and bridges, in order to make it clear to everybody that you have no hankering after home.” 52 Before the boats burn, the cost of retreat is low. After the boats burn, the cost of retreat is high. The burning of the boats commits the army to advance. Realizing that the invading army cannot turn back, the defenders are prone to negotiate peace. “To subdue the enemy without fighting,” Sun Tzu wrote, “is the acme of skill.” 53

We can connect these ideas more closely to bargaining theory. Recall that “threat value” refers to the payoff a player can get on his own without the other’s cooperation. A commitment often consists in a player reducing his own threat value. By making noncooperation less appealing, one commits to cooperating. For example, if the President publicly commits to signing the immigration bill, he makes noncooperation—vetoing the bill at the last minute—politically costly to himself. Foreseeing that the President will not veto, Congress passes the bill.

As another example, consider private parties bargaining over a house. The seller promises not to damage the house before transferring ownership, but the buyer doubts the seller’s promise. Fearful of damage, the buyer might walk away from the deal, leaving both parties worse off. Now suppose the seller can do more than make a promise; she can sign a contract requiring her to maintain the house or pay for its repair. Unlike a bare promise, the contract is enforceable. If the home is damaged, the buyer can use the legal system to force the seller to pay. No longer fearful of damages, the buyer will proceed with the deal. The contract lets the seller make a credible commitment not to damage the house, facilitating its sale.

Good law facilitates bargaining, and bad law obstructs it. In places with good legal systems, parties can use contracts to make credible commitments. A good legal system enforces contracts and prompts deals. Bad legal systems fail to enforce contracts and impede deals. Thus, farmers in Ohio can contract to buy and sell land, while farmers in South Sudan, a new country embroiled in conflict, cannot settle land disputes with a piece of paper.

Public officials often resemble farmers in South Sudan: law does not enforce their bargains. Caleb and Dee cannot sign a contract, enforceable in court, committing each to vote for the other’s proposal. Legal contracts usually do not exist for bargains in public law. Credible commitments in public law often require legal institutions other than contracts. Consider the long struggle for power between the British Parliament and the King. 54 The King often borrowed money, especially in time of war, but failed to repay the loans. Creditors became reluctant to lend the King more money. In 1688, Parliament removed and replaced the King in an event called the Glorious Revolution. The new monarch was forbidden to alter the terms of loans except by the lender’s consent. One might think this restriction weakened the Crown, but the opposite is true. The Crown strengthened itself by making a credible commitment to repay its lenders. Afterward the Crown could borrow more money, and at lower interest rates, than before. The money funded successful wars with France that established England’s dominance for world power.

Bluffing, verifiability, commitment, credibility, trust—these are problems of asymmetrical information in bargaining. They arise in private and public bargaining alike. The vast literature on asymmetrical information encompasses many other problems, some of which we will discuss later.

In the United States, Supreme Court Justices are independent of Congress and the President. However, nominees need Senate approval to join the Court. If you were a Senator, would you trust a nominee who promises to interpret the law objectively?

There are few international courts and no international executives. This makes international law hard to enforce. Some countries have incorporated international law into their domestic systems. This gives international law the same status as (or even higher status than) national law. Does incorporation as we have described it make a country’s commitment to international law stronger? Why might the promise to incorporate international law make bargaining over the substance of that international law easier? 55

Wars waste lives and money in disputes that diplomacy could resolve. Why can’t nations agree to reduce their armies by 50 percent? 56 Why are civil wars within countries harder to end than wars between countries? 57 (Hint: in civil wars, the losing side usually must lay down its arms.)

Imagine a dictatorial society with two types of people. The few rich are organized politically. The numerous poor are disorganized politically. Random events like economic recessions briefly unite the poor. While united, they demand from the rich a greater share of the nation’s wealth. The rich would prefer to pay the poor to go away, but they might have to implement democracy instead. Why? 58

The state accuses the Contamination Corporation of dumping toxic chemicals into a river. The corporation can pay a $300,000 fine or go to court. Consider the expected costs to the corporation. Litigating costs the corporation $50,000. The corporation believes (incorrectly) that it has a 10 percent chance of losing in court and paying $300,000, and a 90 percent chance of winning in court and paying no fine. The corporation’s perceived threat value equals −$50,000 + 0.1(−$300,000) + 0.9($0) = −$80,000. Now consider the expected costs of the state. Litigating costs the state $50,000. The state believes (correctly) that it has a 50 percent chance of winning in court and gaining $300,000 and a 50 percent chance of losing and gaining nothing. The state’s perceived threat value equals −$50,000 + 0.5($300,000) + 0.5($0) = $100,000.

Under these assumptions, the most the corporation would be willing to pay in a settlement equals $80,000, and the least the state would be willing to accept in a settlement equals $100,000. Thus, the parties will litigate rather than settle. Litigating wastes $100,000 in time and money. The corporation’s false optimism precludes a bargain. 59

Asymmetrical information often contributes to false optimism. To illustrate, suppose a state official recorded a video of the Contamination Corporation dumping the chemicals in the river. One side knows something the other does not know. To encourage settlement, the state may show the recording to the corporation. Alternatively, to secure victory by surprising the corporation at trial, the state may not show the recording to the corporation. Without information about the recording, the corporation is too optimistic, and its optimism precludes a deal.

In reality, the legal process would probably require the state to share the recording with the corporation. Can you use bargaining theory to explain why?

C. Monopoly

In 1882, the industrialist John D. Rockefeller and his associates formed a secret trust, combining their companies into Standard Oil, which dominated the petroleum market. Monopoly occurs when a market has one seller like Standard Oil and many potential buyers. The monopolist restrains trade by setting prices at high levels, as with Standard Oil. As another example, AT&T once controlled telephone service in the United States. A ten-minute distance call cost about $20 in today’s money. 60

Monopoly does more than enrich companies at the expense of consumers; it causes inefficiency. To see why, consider the Junction Company, which owns a bridge and charges a toll to cross. Each crossing costs $1 in wear and tear on the bridge. Driver 1 is on a trip for pleasure, and he values crossing the bridge at $5. Driver 2 is delivering materials for a job, and she values crossing the bridge at $10. Because the Junction Company has a monopoly, it can choose the toll. If it sets the toll at $4, both drivers will pay to cross, and the company will earn $6 in profit (with two drivers, the company makes a total of $8 in tolls and pays a total of $2 to maintain the bridge). If the company sets the toll at $9, only Driver 2 will cross. The company will earn $8 in profit ($9 from the toll minus $1 in maintenance). The company prefers $8 to $6, so it will set the toll at $9.

As in this example, monopolists usually earn more when they charge a high price and have few customers than when they charge a low price and have many customers. 61 This is rational for the monopolist but inefficient. Efficiency demands that every driver cross when the benefit of crossing exceeds the cost. With a $9 toll, drivers who value crossing at $5 do not cross, even though crossing would create more benefits ($5 per driver) than costs ($1 in wear and tear). Monopoly creates inefficiency. 62

In general, law can correct inefficient monopolies in private markets in two ways: by regulating prices and by promoting competition. Thus, law can regulate tolls on a single bridge, or law can establish competing governments to build multiple bridges. However, sometimes bargaining will solve the problem of monopoly without government intervention, as we will explain.

According to the Coase Theorem, bargaining among private actors tends toward efficiency as transaction costs approach zero. We can apply the theorem to our example. If the Junction Company’s toll creates inefficiency, there must be a bargaining failure. To see the connection between monopoly and bargaining, consider two ways that monopolists can determine prices. First, the monopolist can name a firm price, as when the Junction Company sets the toll at $9. Drivers can take or leave the price. Inflexibility creates inefficiency by discouraging Driver 1, who is unwilling to pay $9 but whose benefit from crossing ($5) would exceed the cost ($1).

Second, the monopolist can name a flexible price, and each buyer can make a counteroffer. With price flexibility, the parties bargain to reach an exact price. To illustrate, the Junction Company might charge some drivers $4 to cross and others $9 to cross. Everyone who values crossing the bridge at an amount greater than the cost of crossing ($1) strikes a deal and crosses. The bargains are efficient. The inefficiency of monopoly disappears.

Price flexibility faces an obstacle: transaction costs. If the monopolist bargains successfully with buyers, each one pays a negotiated price, 63 but arriving at such a price takes time and effort. Given transaction costs, the monopolist may gain more from naming a firm price and not bargaining over a flexible price.

We have analyzed a classic monopoly in which one buyer faces many sellers. Now consider a bilateral monopoly . This occurs when there is only one seller and only one buyer. If the Junction Company has the only bridge and the Krosswise Shipping Company is the only customer who uses it, there is a bilateral monopoly, and the two parties must deal with each other. Knowing that Junction needs its business, Krosswise demands a low toll. Knowing that Krosswise needs its bridge, Junction demands a high toll. Bilateral monopoly makes bargaining inevitable, and strategic behavior makes the outcome uncertain.

Instead of two-party bargaining, consider three-party bargaining. The U.S. House of Representatives, the Senate, and the President must bargain with one another to make law. Each of the three institutions can prevent a new law. 64 The familiar term for this power arrangement is unanimity rule . Unanimity rule requires all parties to agree. The UN Security Council cannot make certain decisions without the unanimous consent of the five permanent member states. Similarly, the state compact that created the Metro train system required the unanimous agreement of Maryland, Virginia, and Washington, DC. In general, increasing the number of actors who must agree on collective action decreases its probability.

Unlike unanimity rule that requires all three actors in our example to agree, majority rule only requires a majority to agree (two of the three actors in our example). Most state legislatures and appellate courts make decisions using majority rule. A switch from unanimity rule to majority rule reduces the number of actors who must agree on a collective action. The majority need only negotiate an agreement that creates value for them, not for everyone. Consequently, majority rule lowers the transaction costs of collective action.

Specifically, majority rule avoids the problem of holdouts . A holdout is a person whose cooperation is essential for collective action and who refuses to provide it, except under terms that greatly favor him or her. To illustrate, suppose the state wishes to build a road across three parcels of private property. The road will produce $1 million in commerce. Construction of the road will cause $100,000 in damage to each of the parcels. On balance, the road across the three parcels will produce $700,000 in value. However, a road across less than three parcels—two, one, or zero parcels—will be incomplete and produce no value. After construction of the road on two parcels, the owner of the third parcel may hold out for a very high price. The sale of his land will allow completion of the road, increasing value from zero to $700,000. So he may demand $700,000. When the state begins to buy land for the road, each owner can make this same demand for $700,000. If each holds out for $700,000, the state would have to pay $2.1 million for a road that generates $700,000 in value. The state will probably refuse to pay such a high price. Holdouts prevent bargains that would create value.

Short of preventing bargains, holdouts slow bargaining and increase its costs. Holdouts encumber bargaining throughout public law. Thus, Congress cannot enact law without the President’s signature. 65 Like the third parcel owner, the President can hold out, demanding favors from the Senate and the House in exchange for his or her support. With few actors, the problem of holdouts can be overcome; Congress and the President often cooperate and enact statutes. With many actors, holdouts become insurmountable. For over a century, Poland’s legislature operated under unanimity rule. Holdouts paralyzed lawmaking, contributing to the failure of the state. 66

As these facts suggest, public law can lower transaction costs by switching from unanimity to majority rule. Consistent with this prescription, as more countries have joined the European Union, the Council of Ministers has replaced unanimity rule with majority rule for its decisions. 67 Compared to unanimity rule, majority rule increases the pace of collective action, but it also has a downside. With unanimity rule, no agreement happens unless it makes all parties better off. With majority rule, any majority can cut out a minority. A majority of legislators, for example, can omit a minority from an expenditure program or impose disproportionate taxes on them. This is analogous to the example of Caleb and Dee, who agreed to pass proposals that helped them but hurt Graham, the third city councilman, by more. A switch from unanimity to majority rule exacerbates contests over distribution.

In conclusion, unanimity rule risks holdouts that majority rule prevents, and majority rule risks minority exploitation that unanimity rule prevents. This fundamental tradeoff animates the allocation of power in basic laws like the U.S. Constitution. Good public law finds the best balance.

Movie theaters charge high prices for popcorn and forbid customers from bringing their own. Should the state regulate this monopoly by setting popcorn prices?

In the example of holdouts, three landowners each demand $700,000 from the state in exchange for their property. The state is unlikely to pay $2.1 million for the land since the road it wants to build only creates value of $700,000. But suppose the state did pay the $2.1 million. Is this inefficient? Do the payments from the state to the landowners destroy money or transfer money?

The Takings Clause in the U.S. Constitution allows the government to expropriate private property for public use if it pays “just compensation.” 68 In general, “just compensation” means the market price. Why does the government expropriate property instead of simply buying it at the market price?

As discussed, many states free rode on others under the Articles of Confederation. Providing the central government with taxing authority could have alleviated the problem, but amending the Articles required unanimous agreement among 13 states. Why did states fail to amend the Articles but succeed in adopting a new Constitution?

The process for amending the U.S. Constitution has never changed. Nevertheless, amendment has become more difficult over time. Why?

In the 1780s, James Madison, along with Alexander Hamilton and John Jay, wrote a series of essays encouraging the states to ratify the new Constitution. Those essays, commonly called the Federalist Papers , are a landmark of American political theory and an important aid in constitutional interpretation. The Federalist Papers addressed important concerns, including this. In the eighteenth century, many people thought democracy could work in city-states like ancient Athens but not in large countries like the United States. Madison famously disagreed.

In Federalist No. 10 , Madison addressed the danger of factions, “a number of citizens . . . united and actuated by some common impulse of passion, or of interest, adverse to the rights of other citizens.” 69 In Madison’s view, factions are inevitable because people disagree (the “latent causes of faction are thus sown” in our nature). 70 Since factions cannot be eliminated, Madison reasoned that they must be held in check. He argued that enlarging the country would prevent factions from achieving a majority and controlling government: “Extend the sphere, and you take in a greater variety of parties and interests; you make it less probable that a majority of the whole will have a common motive to invade the rights of other citizens.” 71

We can interpret and develop Madison’s argument using bargaining theory. Extending the sphere reduces the chance of a faction attaining a majority. Without a majority, a faction cannot exploit others but must bargain and cooperate with them. If a faction does attain a majority, competing factions ensure it will be short lived: today’s majority becomes tomorrow’s minority, and vice versa. Any majority that enriches itself by exploiting today’s minority must fear that the tables will turn tomorrow. The possibility of being exploited tomorrow tempers the urge to exploit others today. Thus, the solution to factions is more factions. This is Madison’s central claim for extending the sphere of the country, and it demonstrates a powerful connection between bargaining and democracy. 72

IV. Interpretive Theory of Bargaining

According to positive theory, low transaction costs facilitate bargains, and according to normative theory, bargains create mutual gain. Three persistent sources of transaction costs inhibit bargains: free riding, asymmetrical information, and monopoly. Bargaining theory illuminates how legislators enact laws. But it can do more; bargaining theory can help judges. To show how, we turn to interpretation, the third branch of law and economics.

A. The Problem of Legislative Intent

Sometimes the words of a statute seem to contradict the legislature’s intent. Consider United States v. Kirby . 73 A federal statute prohibited “knowingly and willfully obstruct[ing] . . . the passage of the mail.” 74 The Supreme Court had to decide if a sheriff violated the statute when he arrested a mail carrier. Arresting the mail carrier certainly obstructed the passage of the mail. But the sheriff had a good reason for the arrest: the mailman was wanted for murder. Even though the sheriff violated the plain language of the statute, the Court concluded that the statute did not apply to the sheriff’s conduct. According to the Court, “the legislature intended exceptions to its language” to avoid “an absurd consequence.” 75 Considering legislative intent allowed the Court to avoid an unreasonable outcome.

Judges often consider legislative intent when interpreting statutes. Sometimes legislative intent is inferred from common sense, as in Kirby . Surely Congress did not intend its statute to protect murderous mail carriers from arrest. Other times legislative intent is inferred from legislative history . While enacting a bill, many actors—sponsors, opponents, committee chairs, and other members of the legislature—make statements about it. In the United States, committees in the House of Representatives and Senate often write official reports about the bill. Together these materials constitute the legislative history. Sometimes legislative history offers clues about intent.

To demonstrate the use of legislative history, consider Church of the Holy Trinity v. United States . 76 A church in New York signed a contract with an alien (“alien” is a legal term for a noncitizen) named Warren. Under the terms of the contract, Warren moved to New York and worked as a pastor for the church. The question in the case was whether the church violated a federal statute, which stated:

[I]t shall be unlawful for any person, company, partnership, or corporation, in any manner whatsoever, to prepay the transportation, or in any way assist or encourage the importation or migration of any alien . . . into the United States . . . under contract or agreement . . . to perform labor or service of any kind[.] 77

The church seemed to break the law according to its plain language. However, the Supreme Court reached the opposite conclusion. According to the Court, Congress did not intend the statute to prohibit churches from recruiting foreign pastors. The Court based its conclusion in part on legislative history. A committee in the House of Representatives had written a report about the statute before it passed. According to the report, the law targeted aliens “from the lowest social stratum” who “live upon the coarsest food, and in hovels of a character before unknown to American workmen.” 78 Pastors did not fit that description, the Court reasoned, so Congress did not intend the law to cover contracts with pastors.

Many judges use legislative history when searching for legislative intent. Nevertheless, the practice is controversial. Statements from legislators and committees often contradict one another. In anticipation of judges consulting legislative history, legislators might “salt” the record, strategically making statements that reflect their preferred interpretations rather than the proper interpretation. From this morass, the argument goes, judges can extract legislative history to support any interpretation they like. Judge Harold Leventhal quipped that citing legislative history is like “looking over a crowd and picking out your friends.” 79

The criticism runs deeper yet. Legislative history is supposed to clarify legislative intent. But legislative intent, some critics argue, is nonexistent. The legal scholar Max Radin wrote, “A legislature certainly has no intention whatever in connection with words which some two or three [people] drafted, which a considerable number rejected, and in regard to which many of the approving majority might have had, and often demonstrably did have, different ideas and beliefs.” 80

B. The Bargain Theory of Interpretation

Judges interpreting statutes have sought legislative intent for centuries. Have the critics proved them wrong? Should judges abandon the search for legislative intent? No, but it should be reformulated. Legislation is often the product of bargaining. Like Caleb and Dee, legislators compromise over the content of law. To understand a legislative bargain, do not try to aggregate the intentions of individual legislators. This is impossible, as a later chapter will show. Instead, look to the bargain the legislators intended to strike. This is the bargain theory of interpretation . 81

How can one find the terms of a legislative bargain? The text of the statute is the natural place to start. Like buyers and sellers drafting contracts, legislators formalize their deals in the language of the law. According to the bargain theory, judges ordinarily should emphasize the text of statutes when interpreting them. This is consistent with modern judicial practice in many places.

When interpreting a statute, some judges refuse to look beyond the statute’s text. Such judges are called “textualists.” 82 A later chapter will say more about the textualist approach to interpretation. Here we focus on judges who are prepared to look beyond the statute’s text. Many judges will consider a statute’s legislative history. The bargain theory shows them where to look.

The legislative process features many decisive players. In the U.S. Congress, bills do not ordinarily become law unless the chairs of the relevant committees support them. Likewise, bills typically do not get a vote unless the leaders (the Speaker of the House and the Majority Leader in the Senate) agree. To make law, liberals and conservatives often need support from moderates. In exchange for their support, moderates often demand modifications to the proposals. Moderates, leaders, and committee chairs are pivotal: you cannot make law without them. Understanding the views of pivotal players helps us understand the bargain they struck. When interpreting legislation, the bargain theory of interpretation directs judges to focus on the deal struck by the pivotal players.

To demonstrate, consider one of the most important and inspiring statutes in American history: the Civil Rights Act of 1964. It prohibited discrimination based on race, color, sex, religion, or national origin. It opened job opportunities and public accommodations, like restaurants and hotels, to African Americans and other minorities who had long suffered from unequal treatment. This landmark of civil rights remade American society and sparked litigation.

Consider a famous case about the Act, United Steelworkers of America v. Weber . 83 A company had two kinds of workers: unskilled workers who earned low wages, and skilled workers who earned higher wages. At one of the company’s plants, about 2 percent of skilled workers were African American, but 39 percent of the community’s workforce was African American. The company started a training program to turn unskilled workers into skilled workers. Half of the positions in the program were reserved for African Americans. The question in the case was: Does the Civil Rights Act permit voluntary affirmative action programs by private employers?

To interpret a statute, lawyers begin with its language. In Section 703(a), the Civil Rights Act forbade employers from classifying employees “in any way which would deprive . . . any individual of employment opportunities . . . because of such individual’s race[.]” 84 In Section 703(d), the statute forbade employers from discriminating against “any individual because of his race . . . in admission to, or employment in, any program established to provide apprenticeship or other training.” 85 This language cast doubt on the legality of the company’s training program. Reserving half the spots in the program for black workers made it harder for white workers to get in. Thus, white workers were denied opportunities because of their race.

Despite the language of the statute, the Supreme Court upheld the affirmative action program. The Court reached its conclusion by looking to legislative intent. What was Congress trying to achieve when it passed the Civil Rights Act? According to the Court, Congress intended the law to open employment opportunities for African Americans. The affirmative action program was consistent with that purpose, so the program did not violate the statute.

How did the Court identify the purpose of the statute? By looking at legislative history. Consider this statement from Senator Hubert Humphrey, a key supporter of the act, which appeared in the legislative record:

What good does it do a Negro to be able to eat in a fine restaurant if he cannot afford to pay the bill? What good does it do him to be accepted in a hotel that is too expensive for his modest income? How can a Negro child be motivated to take full advantage of integrated educational facilities if he has no hope of getting a job where he can use that education? 86

The legislative history of the Civil Rights Act has many statements like this, though few so eloquent. This history persuaded the Supreme Court that programs to benefit African American workers were consistent with the law.

Two scholars, Daniel Rodriguez and Barry Weingast, analyzed Weber using the bargain theory of interpretation. 87 Here is a brief version of their account. The Democrats in Congress were split. Northern Democrats supported the Civil Rights Act, but southern Democrats strongly opposed it. To pass the law, northern Democrats needed support from Republicans. Senator Everett Dirksen, the leader of Republicans in the Senate, negotiated with the northern Democrats. He and his bloc of Republicans were pivotal; the law could not pass without them.

In exchange for their support, the Republicans demanded that the statute include Section 703(j). Section 703(j) provides that the Civil Rights Act shall not:

be interpreted to require any employer . . . to grant preferential treatment to any individual or to any group because of the race . . . of such individual or group on account of an imbalance which may exist with respect to the total number or percentage of persons of any race . . . employed by any employer. 88

Focus on the language: Section 703(j) shall not “require” preferential treatment. The Supreme Court reasoned that although employers cannot be required to grant preferential treatment, they are permitted to grant preferential treatment. Thus, Section 703(j) did not prohibit the company’s voluntary affirmative action program.

Is this the proper interpretation? Rodriguez and Weingast argue that the answer is no. The Republicans seemed to oppose all discrimination based on race, whether voluntary or not. 89 The Republicans were pivotal and therefore in a position of strength. Given their strength, the proper interpretation of Section 703(j) is broad. That provision prohibits all discrimination at work. The Republicans made their support conditional on that interpretation. The Court erred by reading the provision narrowly, as if Republicans were not pivotal.

Do Rodriguez and Weingast have it right? Maybe yes, maybe no. Beachcombers use metal detectors to find buried jewelry. Sometimes they find trinkets, and sometimes they find treasures. The bargain theory of interpretation is like a metal detector. It tells searchers where to look in the legislative history, but it cannot guarantee a find. Still, the theory improves on traditional approaches to legislative intent.

In general, courts do not consult legislative history if the text of the statute is clear and does not yield absurd results. Is concentrating on the text of the statute consistent with the bargain theory of interpretation? 90

Suppose the legislature enacts a statute with two parts, X and Y. A court reviews the statute and concludes that X is constitutional but Y is unconstitutional. According to the severability doctrine , the court should ask this question: Would the legislature have enacted X without Y? If so, the court should “sever” Y and uphold X. If not, the court should invalidate the entire statute. 91 Would the bargain theory of interpretation and the traditional approach to intentionalism give different answers to the question about X and Y?

Some statutes include severability clauses that explicitly direct courts to sever unconstitutional parts of the statute and leave the remaining parts intact. Do severability clauses increase or decrease the transaction costs of political bargaining?

Sumitomo Shoji America, Inc., was a New York corporation and wholly owned subsidiary of a Japanese corporation. The company only hired Japanese men for managerial positions. Female employees in New York sued the company for discrimination. The company claimed that a treaty between the United States and Japan exempted it from U.S. discrimination law. The governments of Japan and the United States disagreed with the company’s interpretation of the treaty. The Supreme Court ruled against the company, stating, “When the parties to a treaty both agree as to the meaning of a treaty provision, and that interpretation follows from the clear treaty language, we must . . . defer to that interpretation.” 92

Is the Court’s decision consistent with the bargain theory of interpretation?

Suppose Japan and the United States agreed that U.S. discrimination law did not apply to the company, but the language of the treaty stated that U.S. discrimination law did apply to the company. Would deciding that discrimination law did not apply to the company be consistent with the bargain theory of interpretation?

Legislative history comes in different forms. Sponsors, supporters, and opponents of bills make statements. Sometimes the President makes a “signing statement” when he signs a bill into law. To become law, bills usually travel through committees, and committees usually write reports explaining the bills. When the House and Senate pass different versions of the same bill, a conference committee is formed to reconcile them. The conference committee proposes a bill to both chambers under a closed rule , meaning the bill cannot be amended, and it usually attaches a report explaining the bill. Legislative history comes in other forms too.

Courts do not treat all forms of legislative history the same. In their search for legislative intent, they prioritize some forms over others. Here is a list of some legislative history types, organized from most to least influential on courts: conference reports, committee reports, sponsor statements, statements by other legislators, executive signing statements. 93

What legislative history should courts credit, and what legislative history should they ignore? Economics has answers. 94 According to the bargain theory of interpretation, courts should search for the bargain legislators struck. The bargain theory implies that courts should credit statements by pivotal players. Courts do this in some respects. Like the Supreme Court in Church of the Holy Trinity , courts place weight on reports from committees whose support was necessary for a bill’s passage. However, courts fail to do this in other respects. They systematically discount signing statements by the President, even though the President is decisive in most legislation.

These ideas have a converse. If courts should place more weight on statements by decisive players, they should place less weight on statements by nondecisive players. Consider the sponsors of a bill. They usually start by proposing major reforms and compromise to achieve minor reforms, which they prefer to nothing. Courts often credit statements from sponsors and discredit statements from other legislators, including decisive players.

Separate from decisive players, economics provides broader perspective on legislative history. Some legislative statements are cheap talk , meaning legislators face no penalties for saying false or misleading things. Legislators who make statements about a bill after it passes, for example, are usually engaged in cheap talk. Judges should ignore cheap talk. In contrast, statements are credible when legislators face penalties for making false or misleading statements. Senator Humphrey was the Majority Whip in the Senate, and he organized support for the Civil Rights Act. Senators asked him for information about the bill, and he gave it. If Humphrey made false statements, he would endanger his leadership position and reputation. Consequently, Humphrey had a strong incentive not to mislead his colleagues. His statements about the meaning of the act were credible. Perhaps this justifies the weight accorded to his statements by the Court in Weber .

Galileo introduced the concept of a “frictionless plane,” where objects move forever in the same direction at the same speed. Frictionless planes do not exist, but they provide a theoretical baseline for predicting movements of real objects. Similarly, a world with “zero transaction costs” does not exist, but the idea provides a baseline for making predictions about real bargains. When the transaction costs of bargaining are low, private parties allocate entitlements to the parties who value them the most, as required for efficiency. When the costs are high, private parties fail to reach efficient agreements.

To supply public laws, lawmakers must overcome the impediments to political bargaining, which resemble the impediments to private bargaining (externalities, information asymmetries, and monopoly). Lawmakers overcome these impediments through the governmental processes discussed in subsequent chapters—voting, entrenching, delegating, adjudicating, and enforcing. However, the same mechanisms used to correct inefficiencies can be used to aggravate them for political advantage. As subsequent chapters show, the processes of government resemble a drug that can cure or kill, depending on the circumstances and dosage.

Letter from George Washington to the Marquis de Lafayette (Oct. 30, 1780), in 20 The Writings of George Washington 266–67 (John C. Fitzpatrick ed., 1937).

Here is a fuller statement of the legislators’ preferences: each would prefer to spend more money on his or her own project and less on the others.

We assume the legislators are symmetrical: they each have the same number of votes (one), none has more control over the agenda than others, and so forth. Under these assumptions, the contest for distribution destabilizes every possible coalition. We return to this kind of instability in later chapters.

  E.g ., Cal. Const . art. IV, § 12(c)(3) (“The Legislature shall pass the budget bill by midnight on June 15 of each year.”).

  See   Thomas C. Schelling, The Strategy of Conflict (1960).

  See   Damien Cave , The Rhapsody of Port-au-Prince’s Streets , N.Y. Times , June 3, 2010 ; Richard McAdams, The Expressive Powers of Law 23–24 (2015).

42 U.S.C. § 1396b(a).

This game draws on Robert Cooter & Thomas Ulen , Law and Economics 74–76 (6th ed. 2016) .

We assume that the value to Blair of the money equals its face value.

If Blair pays Adam $3,500, Adam receives his threat value of $3,000 plus $500, half of the surplus. Blair gets the cells, which she values at $4,000, and she has $1,500 left over, for a total payoff of $5,500. This equals her threat value of $5,000 plus $500, half of the surplus.

The idea traces to John F. Nash Jr. , Equilibrium Points in N-Person Games , 36 Proc. Nat’l Acad. Sci. 48 (1950) .

For an early analysis, see John P. Gould , The Economics of Legal Conflicts , 2 J. Legal Stud. 279 (1973) . See also   Robert H. Mnookin & Lewis Kornhauser , Bargaining in the Shadow of the Law: The Case of Divorce , 88 Yale L.J. 950 (1979) .

Here is the calculation for the state’s threat value: 0.5(300,000) + 0.5(0) − 50,000 = 100,000. Here is the calculation for the corporation’s threat value: 0.5(−300,000) + 0.5(0) − 50,000 = −200,000.

The germinal analysis of vote trading is James M. Buchanan & Gordon Tullock , The Calculus of Consent: Logical Foundations of Constitutional Democracy (1962) .

Here is the complete text of the statute: “Nothing in ss. 13.05 and 13.06 shall be construed as prohibiting free discussion and deliberation upon any question pending before the legislature by members thereof, privately or publicly, nor as prohibiting agreements by members to support any single measure pending, on condition that certain changes be made in such measure, nor as prohibiting agreements to compromise conflicting provisions of different measures.” Wis. Stat. Ann. § 13.07 (West 2022).

Behind this assertion rests a theorem stating that narrow trading groups are Pareto inefficient compared to wider trading groups. See   Kenneth J. Arrow & Frank Hahn , General Competitive Analysis (1st ed. 1971) .

  Ronald H. Coase , The Problem of Social Cost , 3 J.L. Econ 1 (1960) .

  See, e.g. , Robert Cooter , The Cost of Coase , 11 J. Legal Stud . 1 (1982) .

To be clear, −$10 − (−$20) = $10.

The reasonable solution requires each party to get his or her threat value plus half the surplus. The rancher gets −$20 + $5, or −$15, and the farmer gets $0 + $5, or $5. Both prefer this to noncooperation.

The italicized generalizations refer to the efficiency of production, not the quantity of production. The difference is usually unimportant. To illustrate, the law on whether the range is open or closed affects the relative wealth of the farmer and rancher. Consequently, the law might affect the demand for goods, in terms of prices and quantities. Suppose the rancher prefers to eat beef and the farmer prefers to eat corn. A rule of open range might result in more wealth for the rancher and thus more demand for beef, whereas a rule of closed range may result in the opposite. Differences in demand for beef and corn might imply different placement of fences. The law affects where fences are placed but not the efficiency of their placement.

  J. David Goodman , How Much Is a View Worth in Manhattan? Try $11 Million , N.Y. Times , July 22, 2019 .

  Robert C. Ellickson, Order Without Law (1991).

  Robert Cooter , The Normative Failure Theory of Law , 82 Cornell L. Rev . 947, 949 (1997) .

To simplify, we assume that the cost to Graham of doing the favors equals the benefits to Caleb and Dee of receiving the favors.

138 S. Ct. 1719 (2018).

  Jacob Pramuk , Trump Signs Bill to Temporarily Reopen Government After Longest Shutdown in History , CNBC, Jan. 25, 2019, https://www.cnbc.com/2019/01/25/senate-votes-to-reopen-government-and-end-shutdown-without-border-wall.html .

  Bill Marsh , Pork Under Glass? Small Museums and Their Patrons on Capitol Hill , N.Y. Times , Apr. 30, 2006 .

  Niki Papadogiannakis , Laws Plummet in Post-Earmark Era , The Hill , Oct. 15, 2014 .

United States v. Blagojevich, 794 F.3d 729, 734 (7th Cir. 2015).

  Id . at 735.

A long literature addresses whether the Coase Theorem is tautological. See, e.g. , Douglas W. Allen , The Coase Theorem: Coherent, Logical, and Not Disproved , 11 J. Inst. Econ . 379 (2015) .

Sometimes the best strategies involve randomizing, and sometimes the best strategies have multiple equilibria without a rational way to choose among them. A Nash equilibrium exists if no player wants to change his strategy, given the strategy of other players. See   John Nash , Non-Cooperative Games , 54 Annals of Mathematics 286 (1951) . Multiple Nash equilibria are common in bargaining games.

In a perfectly competitive market, there is no room to bargain. Participants are price takers, accepting market prices as given. Price taking eliminates strategic behavior. Conversely, in imperfectly competitive markets there is room to bargain. Participants try to get a larger share of the surplus from cooperation by getting the best price from others. Participants are price makers.

Efficiency comes in different forms. Pareto efficiency is achieved when no change to the existing allocation of entitlements would make someone better off without also making someone else worse off. Cost-benefit efficiency is achieved when any reallocation of an entitlement would impose more costs than benefits overall. When Adam and Blair trade money for cells, they achieve Pareto efficiency and cost-benefit efficiency. Suppose instead that Adam started with all of the money and the cells. That allocation would be Pareto efficient because changing it—moving money, the cells, or both to Blair—would make Adam worse off. However, that allocation would not be cost-benefit efficient. Moving the cells from Adam to Blair would create $1,000 in value. When we refer to “efficiency” in this book, we usually mean cost-benefit efficiency.

These are called Town Meetings. Authorization for them springs from the state constitution. See   Mass. Const . art. LXXXIX.

52 U.S.C. §10101.

  The Federalist No . 51, 265 (James Madison) (Ian Shapiro ed., 2009).

For sophisticated discussions, see Matthew Adler , Well Being and Fair Distribution: Beyond Cost-Benefit Analysis (2012) ; Matthew Adler , Measuring Social Welfare: An Introduction (2019) .

This remarkable statistic comes from a report by Oxfam International titled Brazil: extreme inequality in numbers, which is available at this link: https://www.oxfam.org/en/brazil-extreme-inequality-numbers .

  See   Robert Cooter & Thomas Ulen , Law and Economics 107 (6th ed. 2016) .

Both taxes and the reallocation of rights can cause inefficiency by discouraging work or wealth accumulation. In our example, if taxes are too high, or if the neighbors have too many rights, the entrepreneur will not earn enough to justify working. Compared to taxes, however, reallocating rights can cause a second source of inefficiency by changing behavior connected to those rights. In our example, granting the neighbor a right to quiet causes the entrepreneur to open a doughnut shop instead of a club, which is the inefficient choice. On the “double distortion” from reallocating rights, see Steven Shavell , A Note on Efficiency vs. Distributional Equity in Legal Rulemaking: Should Distributional Equity Matter Given Optimal Income Taxation? , 71 Am. Econ. Rev . 414 (1981) ; Louis Kaplow & Steven Shavell , Why the Legal System Is Less Efficient Than the Income Tax in Redistributing Income , 23 J. Legal Stud. 667 (1994) .

  See   Charles L. Ballard , John B. Shoven , & John Whalley , General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States , 75 Am. Econ. Rev. 128 (1985) .

  See, e.g ., Zachary Liscow , Reducing Inequality on the Cheap: When Legal Rule Design Should Incorporate Equity as Well as Efficiency , 123 Yale L.J . 2478 (2014) ; Chris William Sanchirico , Taxes Versus Legal Rules as Instruments for Equity: A More Equitable View , 29 J. Legal Stud. 797 (2000) .

  Lorraine Boissoneault , The Deadly Donora Smog of 1948 Spurred Environmental Protection—But Have We Forgotten the Lesson? , Smithsonian Magazine , Oct. 26, 2018 .

The economic theory of public goods, and the associated concepts of rivalry and excludability, are usually traced to a remarkable, three-page paper: Paul A. Samuelson , The Pure Theory of Public Expenditure , 36 Rev. Econ. & Stat . 387 (1954) .

  See   W.M. Crain & R.D. Tollison , Team Production in Political Majorities , 2 Micropolitics 111 (1982) . The connection between team production and free riding is developed in Armen A. Alchian & Harold Demsetz , Production, Information Costs, and Economic Organization , 62 Am. Econ. Rev. 777 (1972) .

As discussed, rivalrous, excludable goods are “private” goods, while non-rivalrous, non-excludable goods are “public” goods. Rivalrous, non-excludable goods are “common” goods or “common-pool resources.” Non-rivalrous, excludable goods are “club” goods. As resources like pastures get crowded, they switch from public goods to common goods.

  See   Russell Hardin , Economic Theories of the State , in Perspectives on Public Choice: A Handbook 24 ( Dennis C. Mueller ed., 1996) (“[W]e resolve the problem of failure to supply public goods by supplying a super-public good, the state, so that it can supply lesser public goods.”).

  Roger B. Myerson & Mark A. Satterthwaite , Efficient Mechanisms for Bilateral Trading , 29 J. Econ. Theory 265 (1983) (proving that individually rational, strategic behavior can prevent efficient bargaining).

For groundbreaking work on cheap talk, see Vincent P. Crawford & Joel Sobel , Strategic Information Transmission , 50 Econometrica 1431 (1982) .

  Sun Tzu, On the Art of War 115 (Lionel Giles trans., 1910).

  Sun Tzu, On the Art of War 77 (Samuel B. Griffith trans., 1963).

  Douglas C. North & Barry R. Weingast , Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England , 49 J. Econ. Hist. 803 (1989) .

  Tom Ginsburg , Svitlana Chernykh , & Zachary Elkins , Commitment and Diffusion: How and Why National Constitutions Incorporate International Law , 2008 U. Ill. L. Rev. 201, 210–13 (2008) ; Pierre-Hugues Verdier & Mila Versteeg , International Law in National Legal Systems: An Empirical Investigation , in   Comparative International Law 525–26 ( Anthea Roberts , Paul B. Stephan , Pierre-Hugues Verdier , & Mila Versteeg eds., 2018 ).

  See   James D. Fearon , Bargaining, Enforcement, and International Cooperation , 52 Int’l Org. 269 (1998) ; Robert Powell , Absolute and Relative Gains in International Relations Theory , 85 Am. Pol. Sci. Rev. 1303 (1991) .

  Barbara F. Walter , The Critical Barrier to Civil War Settlement , 51 Int’l Org. 335 (1997) .

  Daron Acemoglu & James A. Robinson , Why Nations Fail (2012) .

  See   John P. Gould , The Economics of Legal Conflicts , 2 J. Legal Stud. 279 (1973) .

Common Carrier Bureau of the Federal Communications Commission, The Industry Analysis Division’s Reference Book of Rates, Price Indices, and Household Expenditures 62 (Tracy Waldon & James Lande eds., 1997).

In the standard economic model of monopoly, the monopolist maximizes profits by setting a firm price where the marginal revenue from a small increase in production equals the marginal cost.

Besides raising prices, monopolies tend to suppress innovation. For example, members of the New York Stock Exchange collected fees for matching buyers and sellers of stock. When a new technology allowed computers to make matches electronically, the Exchange delayed its adoption. Jacob Goldstein , Putting a Speed Limit on the Stock Market , N.Y. Times Magazine , Oct. 8, 2013 .

Economists call this perfect price discrimination. Perfect price discrimination is efficient, although all of the bargaining surplus goes to the monopolist and none goes to the buyer.

This is not quite correct. Congress can override a President’s veto if two-thirds of the members of the House and the Senate agree, but this happens rarely.

Again, Congress can override a President’s veto if two-thirds of the members of the House and the Senate agree, but this happens rarely.

Liberum Veto, Encyclopædia Britannica, Oct. 30, 2008, https://www.britannica.com/topic/liberum-veto .

The European Council and the Council of the EU Through Time: Decision- and law-making in European Integration, Council of the European Union (2016), https://www.consilium.europa.eu/media/29975/qc0415219enn.pdf .

  U.S. Const . amend. V.

  The Federalist No. 10 , at 48 (James Madison) (Ian Shapiro ed., 2009).

  Id. at 52.

  See Neil Siegel, Intransitivities Protect Minorities: Interpreting Madison’s Theory of the Extended Republic (2001) (unpublished Ph.D. dissertation, University of California, Berkeley) (on file with UMI Dissertation Services).

74 U.S. 482 (1868).

  Id. at 485. Here is the complete text of the statute: “That if any person shall knowingly and willfully obstruct or retard the passage of the mail or of any driver or carrier or of any horse or carriage carrying the same, he shall, upon conviction, for every such offense pay a fine not exceeding one hundred dollars.” 4 Stat. 104 (1825).

  Kirby , 74 U.S. at 486–87.

143 U.S. 457 (1892).

  Id. at 458.

  Id. at 465. This is not the only language in the opinion that shocks modern sensibilities.

  See   Patricia M. Wald , Some Observations on the Use of Legislative History in the 1981 Supreme Court Term , 68 Iowa L. Rev . 195, 214 (1983) .

  Max Radin , Statutory Interpretation , 43 Harv. L. Rev . 863, 870 (1930) .

The theory is developed in McNollgast, Legislative Intent: The Use of Positive Political Theory in Statutory Interpretation , 57 Law & Contemp. Probs . 3 (1994) ; McNollgast, Positive Canons: The Role of Legislative Bargains in Statutory Interpretation , 80 Geo. L.J. 705 (1992) . See also   Frank H. Easterbrook , Foreword: The Court and the Economic System , 98 Harv. L. Rev. 4, 42–58 (1984) ; Victoria Nourse, Misreading Law, Misreading Democracy (2016).

In fact, many textualist judges will consider legislative history in certain circumstances. See, e.g ., Frank H. Easterbrook , What Does Legislative History Tell Us? , 66 Chi.-Kent L. Rev. 441, 448 (1990) (“Intelligent, modest use of the background of American laws can do much to bring the execution into line with the plan.”).

443 U.S. 193 (1979).

Here is the complete, relevant text: “It shall be an unlawful employment practice for an employer . . . to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual’s race, color, religion, sex, or national origin.”

Here is the complete text: “It shall be an unlawful employment practice for any employer, labor organization, or joint labor-management committee controlling apprenticeship or other training or retraining, including on-the-job training programs, to discriminate against any individual because of his race, color, religion, sex, or national origin in admission to, or employment in, any program established to provide apprenticeship or other training.”

United Steelworkers of Am. v. Weber, 443 U.S. 193, 203 (1979). The term “Negro” was common in Senator Humphrey’s day, but it has become uncommon and offensive over time.

  See   Daniel B. Rodriguez & Barry R. Weingast , The Positive Political Theory of Legislative History: New Perspectives on the 1964 Civil Rights Act and Its Interpretation , 151 U. Pa. L. Rev. 1417 (2003) .

Here is the complete text: “Nothing contained in this subchapter shall be interpreted to require any employer, employment agency, labor organization, or joint labor-management committee subject to this subchapter to grant preferential treatment to any individual or to any group because of the race, color, religion, sex, or national origin of such individual or group on account of an imbalance which may exist with respect to the total number or percentage of persons of any race, color, religion, sex, or national origin employed by any employer, referred or classified for employment by any employment agency or labor organization, admitted to membership or classified by any labor organization, or admitted to, or employed in, any apprenticeship or other training program, in comparison with the total number or percentage of persons of such race, color, religion, sex, or national origin in any community, State, section, or other area, or in the available work force in any community, State, section, or other area.”

  See United Steelworkers of Am. v. Weber, 443 U.S. 193, 240 (1979) (quoting senators supporting the bill as saying, “There is no requirement in title VII that an employer maintain a racial balance in his work force. On the contrary, any deliberate attempt to maintain a racial balance, whatever such a balance may be, would involve a violation of title VII because maintaining such a balance would require an employer to hire or refuse to hire on the basis of race. . . . [I]f a business has been discriminating in the past and as a result has an all-white working force, when the title comes into effect the employer’s obligation would be to simply fill future vacancies on a nondiscriminatory basis. He would not be obliged—or indeed permitted—to fire whites in order to hire Negroes.”).

  See   John F. Manning , What Divides Textualists from Purposivists? , 106 Colum. L. Rev . 70 (2006) .

For a discussion of severability, see Caleb Nelson, Statutory Interpretation 142–46 (2011).

Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 185 (1982).

  See   Caleb Nelson, Statutory Interpretation 362–67 (2011); William N. Eskridge Jr.   et al. , Cases and Materials on Legislation and Regulation: Statutes and the Creation of Public Policy 93 (5th ed. 2014) .

  See   McNollgast, Legislative Intent: The Use of Positive Political Theory in Statutory Interpretation , 57 Law & Contemp. Probs . 3 (1994) .

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Psychology and Management pp 95–130 Cite as

Bargaining and Negotiation

• Ian E. Morley  

52 Accesses

4 Citations

Part of the book series: Psychology for Professional Groups

We expect that most of the people who read this chapter have some experience of industrial relations. Some will, no doubt, be engaged in the ‘art of negotiation’ themselves. Others may be contemplating the possibility of ‘collective bargaining’ with a certain amount of apprehension. Others still may simply be intrigued that ‘problem-solving’ groups or committees to which they belong turned into negotiation groups, and failed to solve the problems they were assigned. But very few people will require a definition of negotiation of the kind to be found in academic texts. Quite simply, negotiation occurs whenever people confer, or exchange ideas, to define or redefine the terms of their relationship.

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Allen, A.D. Jr (1971) A systems view of labor negotiations. Personnel Journal, 50, 103–114.

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Batstone, E., Boraston, I. and Frenkel, S. (1977) Shop Stewards in Action: The organization of workplace conflict and accommodation. Oxford: Blackwell.

Bonham, M.G. (1971) Simulating international disarmament negotiations. Journal of Conflict Resolution, 15, 299–315.

Brehmer, B. and Hammond, K.R. (1977) Cognitive factors in interpersonal conflict. In D. Druckman (ed.), Negotiations: Social psychological perspectives. Beverly Hills: Sage.

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Zartman, I.W. (1977) Negotiation as a joint decision making process. In I.W. Zartman (ed.), The Negotiation Process: Theories and applications. Beverly Hills: Sage.

Annotated reading

Atkinson, G.M. (1975) The Effective Negotiator. London: Quest. One of the best of the ‘how to do it’ books. Atkinson introduces theoretical ideas in a clear, concise way. He also makes a number of extremely interesting suggestions designed to help negotiators set objectives based firmly on the realities of the power position between the sides.

Batstone, E., Boraston, E. and Frenkel, S. (1978) Shop Stewards in Action: The organization of workplace conflict and accommodation. Emphasizes the importance of continuity in industrial relations. Batstone et al provide an excellent account of the nature of bargaining relationships. Further, they argue that one class of shop stewards, ‘leader stewards’, are particularly likely to establish strong bargaining relationships with members of management. For more on the organization of conflict see Batstone’s chapter in Stephenson and Brotherton (1979).

Druckman, D. (ed.) (1977) Negotiations: Social psychological perspectives. Beverly Hills: Sage. Contains 13 chapters illustrating the kinds of problems psychologists take to be important in the study of negotiation. Some of the chapters are technical and require a background in psychology. Others may be read without detailed preparation. Overall the book gives a good idea of the ‘state of the art’ with respect to the ‘social psychology of negotiation’.

Elcock, H. (1972) Portrait of a Decision. London: Eyre Methuen. It is a good idea to read a detailed case study of a negotiation, or a biography of a skilled negotiator. There are very few studies of industrial negotiation which provide detailed accounts of the ways in which decisions were made. Elcock provides an account of the Paris Peace Conference which led up to the Treaty of Versailles, since roundly condemned. A very interesting account, full of psychological insight, discussed in detail in my paper, ‘Preparation for negotiation: conflict, commitment and choice’ (in press).

Lockhart, C. (1979) Bargaining in International Conflicts. New York: Columbia University Press. A very clear and well-written statement of the processes of information interpretation, influence and decisionmaking as they occur in negotiation groups. Lockhart emphasizes decisions which shape the general form negotiation will take.

Miron, M.S. and Goldstein, A.P. (1979) Hostage. Oxford: Pergamon Press. An extremely interesting account of the skills involved in ‘hostage negotiations’. In many respects the book is a manual to be used in training the police. Readers may find it useful to compare and contrast hostage negotiation procedures with the conduct of industrial negotiation,

Morley, I.E. (1980) Negotiation and Bargaining. In M. Argyle (ed.), Handbook of Social Skills, Volume 2. London: Methuen. Provides an account of negotiation skill. The chapter is organized around Snyder and Diesing’s model of negotiation. Examines processes of information interpretation, influence strategy and tactics, and decision making. Discusses some of the psychological factors which promote success in negotiation. Readers may be interested in some of the other social skills outlined in Argyle’s book.

Morley, I.E. and Stephenson, G.M. (1977) The Social Psychology of Bargaining. London: George Allen & Unwin. Reviews the psychological factors which influence bargaining, defined as negotiation for agreement. There is a detailed review of laboratory research and a report of a programme of research designed to investigate Ann Douglas’ ideas. Includes transcripts of actual cases.

Stephenson, G.M. (1978) Negotiation and collective bargaining. In P.B. Warr (ed.), Psychology at Work (2nd edn). Harmondsworth: Penguin. A concise, well-written account which places negotiation agreement in the context of a more general treatment of relations between groups.

Stephenson, G.M. and Brotherton, C.J. (eds) (1979) Industrial Relations: A social psychological approach. Chichester: Wiley. A collection of 16 chapters reviewing the contribution of psychology to various aspects of industrial relations. Attempts to show that psychology is applicable to all levels of the ‘industrial relations system’. There are several general discussions of psychology and industrial relations, as well as chapters dealing with intergroup relations, the organization of conflict, pay comparisons, analyses of processes of bargaining and mediation, participation, and government psychologists and industrial relations specialists.

Warr, P.B. (1973) Psychology and Collective Bargaining. London: Hutchinson. Provides an introduction to some of the general areas of psychology relevant to the study of industrial relations. The book is aimed at managers and trade union officials and is written in a straightforward, nontechnical style. Warr includes an interesting case study of pay and productivity negotiation covering a new wages structure in two industrial plants.

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An Essay on Cooperative Bargaining in U.S. Agricultural Markets

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The decision discussed in this case is to examine the advantages and disadvantages of restructuring Dakota Growers Pasta. Cook’s life cycle taxonomy of cooperatives is used to explain how the cooperative moved throughout its life until it restructured as a closely-held organization. The organization does not appear to have changed greatly in its operation since the conversion.

In 2005, North American Bison Cooperative formed a contractual alliance with North Dakota Natural Beef, LLC. The alliance was formed in order to enable the cooperative to enhance returns from its physical and managerial assets by entering the natural beef market. This case describes the resources shared by the cooperative and LLC, how the alliance was governed, the risk of opportunism by the CEO and associated trust building and control mechanisms, and the benefits cooperative members received. Although the two companies operate under different business principles, cooperative members exercise indirect control over the resources they contribute to the venture.

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Copyright© 2009 Knowledge Impact in Society All rights reserved. No part of this book may be reproduced or transmitted in any form by any means without permission in writing from the publisher, except by a reviewer, who may quote brief passages in a review. Editing: D & S Editing (Neil Soiseth)

The principal economic motivation attributed to cooperative activity in agricultural markets rests on some notion of bargaining or pro-competitive effect in an oligopolistic market (eg, Helmberger & Hoos 1965; Sexton 1990). In markets where cooperatives exist among private firms, and where there is a potential behavioral response of private firms to cooperative activity, the pro-competitive rationale seems compelling. Additionally, however, it is not uncommon for agricultural cooperatives to form to provide “unmet services”(Torgerson, ...

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Beyond Intractability

The Hyper-Polarization Challenge to the Conflict Resolution Field: A Joint BI/CRQ Discussion BI and the Conflict Resolution Quarterly invite you to participate in an online exploration of what those with conflict and peacebuilding expertise can do to help defend liberal democracies and encourage them live up to their ideals.

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By Brad Spangler

What is Integrative or Interest-Based Bargaining?

Integrative bargaining (also called "interest-based bargaining," "win-win bargaining") is a negotiation strategy in which parties collaborate to find a " win-win " solution to their dispute. This strategy focuses on developing mutually beneficial agreements based on the interests of the disputants. Interests include the needs , desires, concerns, and fears important to each side. They are the underlying reasons why people become involved in a conflict.

"Integrative refers to the potential for the parties' interests to be [combined] in ways that create joint value or enlarge the pie."[1] Potential for integration only exists when there are multiple issues involved in the negotiation. This is because the parties must be able to make trade-offs across issues in order for both sides to be satisfied with the outcome.

Why is Integrative Bargaining Important?

Integrative bargaining is important because it usually produces more satisfactory outcomes for the parties involved than does positional bargaining . Positional bargaining is based on fixed, opposing viewpoints (positions) and tends to result in compromise or no agreement at all. Oftentimes, compromises do not efficiently satisfy the true interests of the disputants. Instead, compromises simply split the difference between the two positions, giving each side half of what they want. Creative, integrative solutions, on the other hand, can potentially give everyone all of what they want.

There are often many interests behind any one position. If parties focus on identifying those interests, they will increase their ability to develop win-win solutions. The classic example of interest-based bargaining and creating joint value is that of a dispute between two little girls over an orange. Both girls take the position that they want the whole orange. Their mother serves as the moderator of the dispute and based on their positions, cuts the orange in half and gives each girl one half. This outcome represents a compromise. However, if the mother had asked each of the girls why she wanted the orange -- what her interests were -- there could have been a different, win-win outcome. This is because one girl wanted to eat the meat of the orange, but the other just wanted the peel to use in baking some cookies. If their mother had known their interests, they could have both gotten all of what they wanted, rather than just half.

Integrative solutions are generally more gratifying for all involved in negotiation, as the true needs and concerns of both sides will be met to some degree. It is a collaborative process and therefore the parties actually end up helping each other. This prevents ongoing ill will after the negotiation concludes. Instead, interest-based bargaining facilitates constructive, positive relationships between previous adversaries.

Identifying Interests : The first step in integrative bargaining is identifying each side's interests. This will take some work by the negotiating parties, as interests are often less tangible than positions and are often not publicly revealed. A key approach to determining interests is asking "Why?" Why do you want that? Why do you need that? What are your concerns? Fears? Hopes? If you cannot ask these questions directly, get an intermediary to ask them.

The bottom line is you need to figure out why people feel the way they do, why they are demanding what they are demanding. Be sure to make it clear that you are asking these questions so you can understand their interests (needs, hopes, fears, or desires) better, not because you are challenging them or trying to figure out how to beat them.

Next you might ask yourself how the other side perceives your demands. What is standing in the way of them agreeing with you? Do they know your underlying interests? Do you know what your own underlying interests are? If you can figure out their interests as well as your own, you will be much more likely to find a solution that benefits both sides.

You must also analyze the potential consequences of an agreement you are advocating, as the other side would see them. This is essentially the process of weighing pros and cons, but you attempt to do it from the perspective of the other side. Carrying out an empathetic analysis will help you understand your adversary's interests. Then you will be better equipped to negotiate an agreement that will be acceptable to both of you.

There are a few other points to remember about identifying interests. First, you must realize that each side will probably have multiple interests it is trying to satisfy. Not only will a single person have multiple interests, but if you are negotiating with a group, you must remember that each individual in the group may have differing interests. Also important is the fact that the most powerful interests are basic human needs - security, economic well being, a sense of belonging, recognition, and control over one's life. If you can take care of the basic needs of both sides, then agreement will be easier. You should make a list of each side's interests as they become apparent. This way you will be able to remember them and also to evaluate their relative importance.[2]

Creating Options

After interests are identified, the parties need to work together cooperatively to try to figure out the best ways to meet those interests. Often by "brainstorming" -- listing all the options anyone can think of without criticizing or dismissing anything initially, parties can come up with creative new ideas for meeting interests and needs that had not occurred to anyone before. The goal is a win-win outcome, giving each side as much of their interests as possible, and enough, at a minimum that they see the outcome as a win, rather than a loss.

Using Integrative and Distributive Bargaining Together

Although distributive bargaining is frequently seen as the opposite of integrative bargaining, the two are not mutually exclusive. Distributive bargaining plays a role in integrative bargaining, because ultimately "the pie" has to be split up.

Integrative bargaining is a good way to make the pie (joint value) as large as it possibly can be, but ultimately the parties must distribute the value that was created through negotiation. They must agree on who gets what. The idea behind integrative bargaining is that this last step will not be difficult once the parties reach that stage. This is because the interest-based approach is supposed to help create a cooperative working relationship. Theoretically, the parties should know who wants what by the time they split the pie.[3]

[1] Watkins, Michael and Susan Rosegrant, Breakthrough International Negotiation: How Great Negotiators Transformed the World's Toughest Post-Cold War Conflicts (San Francisco: Jossey-Bass, 2001), 31. < http://www.beyondintractability.org/bksum/watkins-breakthrough >.

[2] The principal ideas regarding identifying interests outlined here were drawn from : Roger Fisher and William Ury. Getting to Yes: Negotiating Agreement Without Giving In , 3rd ed. (New York: Penguin Books, 2011). < http://www.beyondintractability.org/library/external-resource?biblio=23737 >.

[3] The idea that integrative or interest-based bargaining will always include distributive bargaining too, was originally put forth by David Lax and James Sebenius in The Manager as Negotiator: Bargaining for Cooperation and Competitive Gain , 1986. < http://books.google.com/books?id=FN_OIG0-alEC >.

Use the following to cite this article: Spangler, Brad. "Integrative or Interest-Based Bargaining." Beyond Intractability . Eds. Guy Burgess and Heidi Burgess. Conflict Information Consortium, University of Colorado, Boulder. Posted: June 2003 < http://www.beyondintractability.org/essay/interest-based-bargaining >.

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Essay on collective bargaining.

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Read this essay to learn about Collective Bargaining. After reading this essay you will learn about: 1. Definitions of Collective Bargaining 2. Features of Collective Bargaining 3. Objectives 4. Types 5. Subject Matter 6. Need and Importance 7. Process 8. Functions 9. Role in Human Resource Management.

• Essay on the Role of Collective Bargaining in Human Resource Management

Essay # Definitions of Collective Bargaining :

Collective bargaining is concerned with the relations between trade unions (representatives of workers) and the management (representatives of employers). Bargaining is collective because chosen representatives of labour and management act as bargaining agents.

Both parties sit at the bargaining table where they deliberate, persuade, try to influence, argue and haggle. Eventually they reach at an agreement which they record in the form of labour management contract.

Different authors have defined collective bargaining as follows:

According to Michael J. Jucius, “Collective bargaining refers to a process by which employers on the one hand and representatives of the employees on the other, attempt to arrive at agreements covering the conditions under which employees will contribute and be compensated for their services.”

According to Encyclopaedia of Social Services, “Collective bargaining is a process of discussion and negotiation between two parties one or both of whom is a group of persons acting in concert. The resulting bargain is an understanding as to terms and conditions under which a continuing service is to be performed.”

According to Edwin B. Flippo, “Collective bargaining is a process in which the representatives of labour organisation and the representatives of business organisation meet and attempt to negotiate a contract or agreement which specifies the nature of the employer-employee union relationship.”

According to J.H. Richardson, “Collective bargaining takes place when a number of work people enter into a negotiation as a bargaining unit with an employer or group of employers with the object of reaching an agreement on the conditions of the employment of the work people.”

According to Archibald Cox, “Collective bargaining is the resolution of industrial problems between the representatives of employers and the freely designated representatives of employees acting collectively with a minimum of government direction.”

According to Dale Yoder, “Collective bargaining is the term used to describe a situation in which the essential conditions of employment are determined by a bargaining process undertaken by representatives of a group of workers on the one hand and one or more employers on the other.”

According to S.H. Slitcher, “Collective bargaining is the beginning of industrial jurisprudence. It is a method of enforcing citizenship right in industry i.e. management should abide by certain ruler rather than taking arbitrary decision.”

In simple words, collective bargaining is a process, a technique or device to protect the interests of the employers and the employees to determine the employment conditions, to fix the wage and salary and achieve the objectives of the organisation. It is not a decree from outside parties. It represents voluntary conciliation and voluntary arbitration and is never a compulsory adjudication.

Essay # Features of Collective Bargaining:

The essential features of collective bargaining are as follows:

1. Group and Collective Action:

It is a collective process in two ways. First, the workers collectively bargain for their common interests and benefits. Secondly, the workers and management jointly arrive at an amicable solution through negotiations.

2. Strength:

It is an industrial democracy at work. Across the table, both parties bargain from a position of equal strength. In collective bargaining, the bargaining strength of both the parties is equal.

3. Continuous Process:

It is a continuous process. It establishes regular and stable relationship between the parties involved. It involves not only the negotiation of the contract but also fee administration or application of the contract also. It means that bargaining is a day to day process.

4. Flexible:

It is flexible and the parties have to adopt a flexible attitude throughout the process of bargaining since no party can afford to be rigid and inflexible. The special feature of collective bargaining is that both the parties concerned start negotiations with completely divergent views but finally reach a middle point acceptable to both. It is, therefore, not a one way street but a give and take process.

5. Voluntary:

Collective bargaining is a voluntary process on the part of the management and workers. Both the parties come to the bargaining table in order to have a meaningful dialogue on various troubling issues. The implementation of the agreement reached is also a voluntary process.

6. Dynamic:

Collective bargaining is a relatively new concept and is growing, expanding and changing. The way agreements are arrived at the way they are implemented, the mental makeup of the parties keep on changing. In the past, the concept used to be emotional, turbulent and sentimental, but now it is scientific, factual and systematic. Its coverage and style have changed.

7. Power Relationship:

Collective bargaining involves a power relationship. Workers want to gain the maximum from the management and management wants to extract the maximum from workers by paying as little as possible.

To reach a solution, both have to retreat from their positions and accept less than what is asked for and give more that what is an offer. By doing so management wants to retain its control on workers and work place matters and unions attempt to strengthen thus hold over workers without any serious dilution of their powers.

8. Bipartite Process:

The management and the workers negotiate the issues directly face to face across the table. There is no third party intervention.

9. Two-Party Process:

It is a mutual give and take rather than a take-it-or-leave-it method of arriving at the settlement of a dispute. As two parties are involved in it, it can succeed only when both labour and management want it to succeed.

Essay # Objectives of Collective Bargaining :

The main objectives of collective bargaining are as follows:

1. To maintain cordial relations between the management and the workers.

2. To settle disputes/conflicts relating to wages and working conditions.

3. To protect the interests of the workers through collective action and to prevent unilateral action on the part of the employers.

4. To ensure the participation of trade unions in industry.

5. To resolve the differences between workers and management through voluntary negotiations and arrive at a consensus.

6. To avoid the need for Government intervention as it is a voluntary process.

Essay # Types of Collective Bargaining :

There is a great deal of variation in collective bargaining practices. Collective bargaining in the strictest sense is understood to be the process of a positive give and take between workers and employers.

However, in practice, collective bargaining by and large follows only when confrontation takes place between the union and the management, making it appear as a form of conflict, a way to present workers’ demand and to obtain employer’s compliance with such demands.

According to Richard E. Walton and Robert B. McKersie, “ A collective bargaining process generally consists of four types of activities—distributive bargaining, integrative bargaining, attitudinal structuring and intra-organisational bargaining.”

(i) Distributive Bargaining:

It involves haggling over the distribution of surplus. Under it, the economic issues like wages, salaries and bonus are discussed. In distributive bargaining, one party’s gain is another party’s loss.

(ii) Integrative Bargaining:

This involves negotiation of an issue on which both parties may gain or at least neither party loses. For example, representatives of employer and employees may bargain over a better training programme or a better job evaluation system.

(iii) Attitudinal Structuring:

This involves shaping and reshaping some attitudes like trust or distrust, friendliness or hostility between labour and management. When there is a backlog of bitterness between both the parties, attitudinal structuring is required to maintain smooth and harmonious industrial relations.

(iv) Intra-organizational Bargaining:

This is a type of manoeuvring to achieve consensus with the workers and management. Even within the union there may be differences between different groups. Within the management also there may be differences. Trade unions manoeuvre to achieve consensus among the conflicting groups.

In India, collective bargaining has been classified under four categories.

(i) Agreements which are negotiated by officers during the course of conciliation proceedings and are called Settlements under the Industrial Disputes Act.

(ii) Agreements which are concluded by the parties themselves without reference to a Board of conciliation and are signed by them. Copies of such agreements are, however, sent to appropriate governments and to conciliation officers.

(iii) Agreements which are negotiated by the parties on a voluntary basis when disputes are subjudice and which are later submitted to industrial tribunals, labour courts or labour arbitrators for incorporation into the documents as parts of awards. These are known as Consent Awards.

(iv) Agreements which are drawn up after direct negotiations between labour and management and are purely voluntary in character. These depend for their enforcement on moral force and on the goodwill and cooperation of the parties.

Essay # Subject Matter of Collective Bargaining :

The subject matter of collective bargaining is very wide and it covers a variety of issues affecting employment relationships between the workers and the management.

The Indian Institute of Personnel Management, Calcutta suggested the following subject matter of collective bargaining:

1. Purpose of agreement, its scope and the definition of important terms.

2. Rights and responsibilities of the management and of the trade union.

3. Wages, bonus, production norms, leave, retirement benefits and terms and conditions of service.

4. Grievance redressal procedure.

5. Methods and machinery for the settlement of possible future disputes and

6. Termination clauses.

Essay # Need and Importance of Collective Bargaining :   

Collective bargaining has come to be recognised as a legal and socially sanctioned way of regulating the forces of power and influence inherent in organised labour management groups.

According to the National Commission on Labour, “The best jurisdictions for collective bargaining is that it is a system based on bipartite agreements and as such superior to any arrangement involving third party intervention in matters which essentially concern employers and workers.”

Thus, collective bargaining is important for a number of reasons:

1. It is a democratic method for the regulation of the conditions of employment of those who are directly concerned about them. It is a voluntary process without any third party intervention.

2. It results in better understanding between workers and management. The employer gains a better insight into the problems and aspirations of workers and the workers become better aware of the economic and technical problems of the industry.

3. It provides a flexible means for the adjustment of wages and employment conditions to economic and technological changes in the industry, as a result of which the chances of conflict are reduced.

4. It helps in establishing a code that defines the rights and obligations of each party. Basic standards are fixed and management cannot take arbitrary actions to exploit workers. It creates a sort of “industrial jurisprudence”.

5. It provides a solution to the problem of industrial sickness in industry and ensures old age pension benefits and other fringe benefits.

6. It facilitates better implementation of decisions due to the direct involvement of both the parties.

7. It is the most important and significant aspect of labour management relations and extends the democratic principle from the political to the industrial field.

8. It is a measure to distribute equitably the benefits derived from industry among all the participants including the employees, the unions, suppliers the management, the customers, and the public.

Essay # Process of Collective Bargaining:

The whole process of collective bargaining takes place mainly in two stages:

(i) Negotiations 

(ii) Implementation

The following steps are involved in the collective bargaining process:

1. Identification of the Problem:

The nature of the problem influences the whole process of collective bargaining. As such it is important for both the parties to be clear about the problem before entering into negotiations. The nature of problem influences the selection of representatives, their number, period of negotiations and period of agreement that is reached ultimately.

2. Preparation for Negotiation:

Negotiations may commence at the instance of either party-labour or management. Both employers and employees devote a great deal of time to the preparations for negotiation. The necessary data has to be collected on a number of issues. The personnel department sets the objectives which are proposed to be achieved through negotiation and which have to be necessarily related to anticipate trade union demands.

Before the negotiations commence, the approval of the top management must be obtained on:

(i) The specific proposals of the company, including the objectives of the negotiation.

(ii) The appraisal of the cost of implementing the proposals if they are accepted by the two parties.

(iii) The approval in principle of the demands of the trade union over which bargaining has to be made; the demands which are acceptable to the company and the demands which cannot be accepted by it.

3. Negotiation Procedure:

In the first stage, representatives for the negotiation are to be selected. Such persons should be selected who can carry out negotiations with patience, composure and who can present their views effectively.

After selection, they should be educated about the problem and its pros and cons. Their powers and authority during negotiations should be decided. Other preparations include fixing up time for negotiations, period of negotiations etc.

Usually there will be a chief negotiator who is from the management side. He directs and presides over the negotiations. The chief negotiator presents the problem, its intensity and nature and views of both the parties. Then he allows the representatives of both the parties to present their views. Representatives from both the sides should reach the negotiation table with positive frame of mind.

They should be attentive to the other party’s problems. They should try to find out what the other party is arguing for.

Then they should try to think about what counter arguments they can present and how to say ‘no’ effectively while the other party is presenting its views. By understanding and weighing the problems of the other party, sometimes a better solution may be reached which is more acceptable to both the parties.

The collective bargaining generally culminates into an agreement which is known as a labour contract, union contract or a labour-management contract, which is the end process of collective bargaining and is a statement of the terms and conditions of service which has been arrived at between the two parties.

The agreement should be printed and circulated among all the employees so that they know exactly what has been agreed upon between the management and their representatives. Then both parties should sign the agreement which in turn, becomes a binding contract for both the parties; the terms of which must be sincerely observed by them.

4. Implementation of Contract:

According to Prof. Williamson and Harris, “If anything is more important to industrial relations than the contract itself, it is the administration of the contract. The progress in collective bargaining is not measured by the mere signing of an agreement. Rather it is measured by the fundamental human relationships agreement. The negotiation of the contract may have suspense drama of a sort which draws public attention. This is the spectacular side of collective bargaining. The unspectacular and more lasting and important side in the day in and day out process which keeps labour and management from the public disputes stage.”

The agreement can be made on a temporary basis. In such case, before the expiry of agreement both parties consult each other and can terminate or renew the agreement depending upon the circumstances. This may again lead to negotiations. As such, collective bargaining is not a temporary accommodation, but is a continuous process.

Essay # Functions of Collective Bargaining:

According to Arthur D. Butler, collective bargaining performs three important functions:

(i) Technique of long run social change

(ii) Peace treaty between two parties in continual conflict

(iii) System of Industrial Jurisprudence

1. Long Run Social Change:

In a broader sense, collective bargaining is not confined only to the economic relations between employers and employees; rather it is a technique of long run social change, bringing about rearrangements in the power hierarchy of competing groups.

According to Selig Perlman, “It is a technique whereby an inferior social class or group exerts a never slackening pressure for a bigger share in the social sovereignty as well as more welfare, security and liberty for individual members. Collective bargaining manifests itself equally in politics, legislation, court litigation, government administration, religion, education and propaganda.”

The contribution of collective bargaining towards the process of social change brings to light two important implications:

(a) Collective bargaining is not an abstract class struggle but is rather pragmatic and concrete. The inferior class does not attempt to abolish the old ruling class but merely to become equal with it. It aims to acquire a large measure of economic and political control over crucial decision in the areas of its most immediate interest and to be recognised in other areas of decision making.

(b) The process of change initiated by collected bargaining is a source of stability in the changing environment. Wage earners have enhanced their social and economic position and at the same time management has retained a large measure of power dignity.

These gains were not registered in one great revolutionary change, but rather step by step, with each class between opposing parties settled with a new compromise somewhat different from previous settlement. Thus, collective bargaining accomplishes long run stability on the basis of day to day adjustments in relations between management and labour.

2 . Peace Treaty:

Collective bargaining is a sort of peace treaty between two parties in continual conflict. This conflict is smoothened by the compromises. Compromise represents a state to which each side is prepared to descend from the original stand (with neither party fully satisfied). This receding from original position may come about in two major ways.

(a) Compromise with Combative Aspects:

When combative aspects of parties are in operation the outcome of struggle depends on the parties relative strength. The extent to which each side is willing to accept less than its original bargaining demand depends, in part, on how strong it feels relative to its opponent.

The compromise then is a temporary truce with neither side being completely satisfied with the results. Since the contract is always of limited duration each begins immediately to prepare a new list of demands, including previously unsatisfied demands and to build up its bargaining strength in anticipation of next power skirmish.

(b) Compromise without Combative Aspects:

The compromise reached between the two parties is not always the culmination of continuous struggle and antagonistic attitudes. A tranquil stability is achieved in the process of controlling economic changes. The union starts first of all to make changes and improvements in its relations with the employers.

Once a truce has been signed the union stabilizes working conditions by presenting the status defined in the contract. It generally adheres to this contract and might bring sanction against any attempt to abrogate the contract.

3 . Industrial Jurisprudence:

Collective bargaining creates a system of Industrial Jurisprudence. It is a method of introducing civil rights into industry, that is, of requiring that management be conducted by rules rather than arbitrary decisions. It establishes rules which define and restrict the traditional authority exercised by employers over their employees placing a part of authority under the joint control of union and management.

(a) It is rule making or legislative process, in the sense that it formulates the terms and conditions under which labour and management will cooperate and work together over a certain stated period.

(b) It is an executive process, for both management and trade union officials share the responsibility of enforcing the rules.

(c) It is a judicial process for in every collective agreement there is a clause/provision regarding the interpretation of the agreement.

Essay # Role of Collective Bargaining in Human Resource Management :

The role of collective bargaining may be evaluated from the following points of view:

1. From the Management Point of View:

The main objectives of every management are:

(a) To earn higher profits at lower cost and

(b) To have maximum utilisation of workers.

To achieve these objectives cooperation is required from the side of the employees and collective bargaining is a device to get and promote cooperation. Collective bargaining is the best measure for maintaining the cordial relations. Strikes, go-slow tactics are avoided which result in increasing the production. It promotes industrial democracy.

2. From the Workers’ Point of View:

The management has a tendency to exploit the labour class as they have very poor bargaining power. Individually a worker has no existence. But when they join hands they become a power to protect their interests against the exploitation by the employers.

The collective bargaining imposes certain restrictions upon the employers. Employers are not free to make and enforce decisions at their own will. All important decisions are to be taken through negotiations with the labour unions.

3. From the Trade Union Point of View:

Collective bargaining strengthens the trade union movement because trade unions are the bargaining agents of the workers. The main function of the trade unions is to protect the interests of the workers through constructive programmes and collective bargaining is one of the devices to attain that objective through negotiations with the employers.

4. From Government Point of View:

Government is also affected by the process of collective bargaining. Government passes and implements several labour legislations and desires it to be implemented in its true sense. Collective bargaining helps the Government in the enforcement of these laws, as an amicable agreement can be reached between the employers and employees for implementing legislative provisions.

Moreover, as labour problems are minimised through collective bargaining, industrial peace will be promoted in the country without any force.

Related Articles:

• Collective Bargaining: Meaning, Prerequisites and Levels
• Collective Bargaining: Meaning Objectives and Importance

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Essay on Bargaining

Students are often asked to write an essay on Bargaining in their schools and colleges. And if you’re also looking for the same, we have created 100-word, 250-word, and 500-word essays on the topic.

Let’s take a look…

100 Words Essay on Bargaining

Introduction to bargaining.

Bargaining is when two people talk to agree on a price. It is like a game where one person tries to get a lower price, and the other tries to keep the price high. This happens a lot in markets where prices are not fixed.

Why do we Bargain?

We bargain to save money. It feels good when we pay less for something we want. Sometimes, people bargain because they feel the price is too high. Other times, it’s just for fun.

How to Bargain

To bargain well, you need to be confident and patient. Start by offering a price lower than what you are willing to pay. Then, listen to the seller’s counteroffer. Keep discussing until you both agree.

Importance of Bargaining

Bargaining is important because it helps us save money. It also helps sellers make sales. Without bargaining, some people might not be able to afford what they need. So, bargaining is good for both buyers and sellers.

Also check:

• Advantages and Disadvantages of Bargaining

250 Words Essay on Bargaining

What is bargaining.

Bargaining is a type of negotiation in which the buyer and seller discuss the price of a product or service. The aim is to reach a price that is fair for both parties. It is a common practice in many markets around the world, especially in local markets where prices are not fixed.

The Process of Bargaining

The process of bargaining starts when a buyer shows interest in a product. The seller usually quotes a price higher than the actual price they want. The buyer then offers a lower price. This back-and-forth continues until both parties agree on a price. It is like a friendly match where both sides use their skills to get the best deal.

Skills Required for Bargaining

Good bargaining needs certain skills. Patience is very important. You should not rush into buying at the first price the seller quotes. Also, you need to have good communication skills. You should be able to express your point of view clearly. It’s also important to have knowledge about the product and its market price. This will help you bargain effectively.

Bargaining plays a vital role in our daily life. It helps us save money. It also helps in maintaining a balance in the market. If everyone pays the first price quoted by the seller, some sellers might take advantage and raise their prices unfairly. So, bargaining helps to keep the prices in check.

In conclusion, bargaining is not just about getting a lower price. It is a skill that requires patience, good communication, and knowledge about the product. It is an important part of our daily life and helps in maintaining a fair market.

500 Words Essay on Bargaining

Bargaining is a type of negotiation where two or more parties discuss terms until they reach an agreement. It usually happens when people want to buy or sell something. The buyer wants to pay the least amount possible, and the seller wants to get the most. They talk and negotiate until they reach a price that both sides are happy with. This is the basic idea of bargaining.

The Importance of Bargaining

Bargaining is very important in our daily life. It helps us save money when we are shopping. We can use the saved money for other important things. It also helps us to understand the value of money. When we bargain, we learn that every penny counts.

Bargaining is not just about money. It can also be about time, resources, or anything else that people value. For example, you might bargain with your friend about who gets to play a video game first, or with your sibling about who has to do the dishes.

Skills Needed for Bargaining

Good bargaining requires some skills. You need to be patient. It is not always easy to get what you want right away. You might need to talk and negotiate for a long time before you reach an agreement.

You also need to be respectful. You should listen to the other person’s point of view and try to understand it. This will help you find a solution that both sides are happy with.

Another important skill is being confident. You need to believe in what you are asking for. If you don’t believe in it, the other person might not either.

Benefits of Bargaining

Bargaining has many benefits. It can help you save money and get better deals. It can also help you learn important skills like patience, respect, and confidence. These skills can help you in many areas of your life, not just when you are bargaining.

Bargaining can also help you understand other people better. When you bargain, you need to try to understand the other person’s point of view. This can help you learn about different perspectives and become more open-minded.

In conclusion, bargaining is a very useful skill to have. It can help you in many ways, from saving money to learning important life skills. So next time you are shopping or negotiating for something, don’t be afraid to bargain. It might take some time and patience, but the benefits are worth it.

That’s it! I hope the essay helped you.

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America Should Embrace a Parliamentary Democracy

O ur nation faces the serious threat of electing Donald Trump for a second term despite his willingness, even enthusiasm, for gutting vital democratic norms . What appears to be a glitch in the U.S. electoral system is actually an inherent feature: it can produce a dictator.

Many voters regard our centuries-old system as fundamentally sound and wise. But this view is mistaken: Our two-party presidential scheme produced Donald Trump. And ending the risk of electing a dictator means giving up our right to vote for one.

The solution lies in embracing a system of parliamentary democracy that blunts the risk of an extremist taking power—one that leading political scientists consider the best means of doing democracy. The scheme, called mixed-member proportionality (MMP), is uniquely suited to ending the ongoing threat of dictatorship posed by our two-party presidential system. Under MMP, voters will give up voting directly for President and Vice President in exchange for genuine power to affect the direction of our government, all while diminishing the threat of an authoritarian gaining power.  

In our two-party presidential system, the risk of an authoritarian like Trump gaining power always lay just beneath the surface. The very structure of our system invites it.

The ever-present danger of our system is an extremist representing a subset of voters gaining control over one party, then prevailing against the other in the general election. This renders two-party presidentialism ripe for dictatorial exploitation. Each side’s overwhelming demand for unity, including with constituencies embracing deeply problematic views, forces us into two competing camps. The threat to democracy becomes acute when these pressures become so intense that one party succumbs to the will of a leader bent on doing whatever it takes to gain and hold power. When a party leader, such as Trump, is singularly focused on power, voter suppression, hyper-partisan gerrymandering, obstructive legislative tactics, and manipulative confirmation practices risk being transformed from outlier strategies to playbook. Even fomenting a violent attempt at blocking the peaceful transfer of power, and demanding loyalists condone it, becomes just another Wednesday. Our system’s demand for unity is so strong that once each party settles on its presidential candidate, party elites see their job as serving even the most problematic standard bearer.

Both parties need not experience these power dynamics in the same way. The ultimate threat to democracy arises when an opportunistic leader takes control of one party while exploiting tensions beneath the surface on the other side. Trump’s nationalist campaign not only transformed the GOP; it has also stressed the fault lines between the centrist Democrats and that party’s progressive base.

Intuitively, voting directly for President and Vice President might seem to safeguard against a dictator. Voters can simply vote for the other candidate. Instead, our system disempowers voters by demanding that they choose the lesser of two evils every four years. Partisan extremism risks leading voters on each side to rally behind their candidate—no matter how problematic—viewing the other as an existential threat.

An irony of two-party presidentialism is that as the threat to democracy grows, voters feel increasingly disengaged and disempowered.

There is a genuine pathway forward: transform the U.S. into a thriving multiparty parliamentary democracy. The solution demands changing two features of how we do the business of democracy in the U.S. We must change how we elect the House of Representatives and how we choose and hold accountable the President. The centerpiece shifts the choice of President from voters to House party leaders. To appreciate why this alternative system is superior to ours, we must revisit some commonly held intuitions about our own electoral politics.

Successful democracies embrace two defining features missing in American democracy: proportional representation and coalition governance. These attributes of well-designed parliamentary systems dramatically lower the risk of an authoritarian taking power. Proportional representation means parties are seated in the legislature, typically the lower chamber, based on their relative percentages of votes. Coalition governance is a process by which party leaders, based on proportional representation, negotiate to form a governing majority and the party that leads the successful negotiation then heads the government.

Democracy is about ensuring voters have genuine input into what their choices are. Limiting our choices to two candidates, Joe Biden and Trump, despite a supermajority— 63% —of voters frustrated by our two parties and hoping for more options, doesn’t empower voters. Voters are empowered when the options before them meaningfully reflect their values. This explains why, as political scientist Arend Lijphart shows in his book  Patterns of Democracy: Government Forms and Performance , voters in coalition systems are happier. They turn out in higher numbers. Their governments are more responsive.

Voters in our system rightly wish for third parties, with candidates who truly align with their sincerely held beliefs and preferences. But to have viable third, fourth, or more parties, we must give those parties a genuine role in governance. That means the power to join a governing coalition in exchange for delivering policy commitments or favored appointments to their constituents. Unlike two-party presidentialism, multi-party coalitions give third parties that role. A comparison of systems in different democracies reveals that two seemingly opposite dynamics pose the same threat. Two-party presidentialism invites the risk of an authoritarian taking over one party, then taking control of the government. But in an electoral scheme with too many parties, the threat of an authoritarian seizing control also resides beneath the surface. With too many parties, one party led by a charismatic leader who represents a minority of the electorate can gain more seats than any other even if far short of a majority. This becomes the first step in rolling over other parties, one by one, in the quest for eventual control. This very danger, experienced in the Nazi regime, contributed to post-World War II Germany embracing MMP, which political scientists widely consider the best way to do democracy.

To thwart dictatorship, we must fight against the twin threats. We must achieve the political Goldilocks principle—not many parties, nor too few.

Political scientists recognize the solution and agree that MMP is the most well-functioning democratic scheme . MMP produces more parties, with a sweet spot between four and eight. It does so by blending two forms of electoral representation in the lower legislative chamber, for us the House of Representatives. In the U.S., each voter would cast two ballots, one by district, as we do now, and one by party. Winner-take-all district voting will still favor two parties. But the party votes would then be used to ensure that each state’s House delegation reflects party proportionality. The combination makes it exceedingly difficult for any single party to capture a majority of seats in the House.

The most vital step in the fight against dictatorship comes next. In descending order of representation, up to five party leaders negotiate until a majority coalition forms. With supporters no longer wasting votes, third parties helping form a coalition will demand policy concessions or favored appointments as their price, providing genuine value to their constituents. The party that succeeds in negotiating a majority coalition will have its predesignated slate assume the offices of President and Vice President.

This scheme will end the two-party presidential system—and the risk of dictatorship—and transform the U.S. into a thriving multi-party parliamentary system. Candidates can no longer succeed simply by denigrating the other side. They must demonstrate a willingness to govern with other parties, despite inevitable policy disagreements. Party leaders will no longer succumb to extremists for fear of fracturing their side and ceding power to the opposition. Instead, they’ll realize that success demands moderating stances to forge majority coalitions.

Read more: What to Know About the Origins of ‘Left’ and ‘Right’ in Politics, From the French Revolution to the 2020 Presidential Race

Two-party presidentialism disallows the moderating influence, and pressures, required for effective coalition governance. As the GOP shrinks in size, calls for unity increasingly mean acquiescing to Trump’s most outrageous demands. This includes embracing lies about 2020 election fraud and the events of January 6, 2021. For Democrats, growing fragmentation marked by an unpopular incumbent and divisions associated with his age, handling of the southern border, and navigating the Middle East, risk threatening Biden’s ability to maintain the coalition and turnout that propelled him into the White House in 2020.

However the 2024 election is resolved, no single election can permanently end the threat of dictatorship. Accomplishing that demands radical, yet achievable, reform.

Transforming our two-party presidential system into MMP requires amending the Constitution—one amendment to change how we elect members of the House, and two that change how we select and hold accountable the President. Amendments can be proposed by a two-thirds vote of each House of Congress or by a constitutional convention called by two-thirds of states. Proposed amendments must be ratified by three-fourths of the states. The process is difficult. But it’s mistaken to believe it can’t be achieved to avert an existential threat to our democracy.

When we hit the inflection point of inevitable constitutional change, parliamentary America will appeal to those whose support is vital to approval. First, sitting members of both Houses of Congress keep their jobs. Second, key politicians gain new powers. Members of the House gain the power to select the President through coalition bargaining. No longer beholden to the leaders of only two parties, politicians can embrace sincerely held views without fear of retribution. And state politicians gain a new pathway to Capitol Hill through proportionality and party lists.

A shift to parliamentary America will end our constitutional crisis. We must replace two-party presidentialism with a well-designed system of multiparty coalition governance. By giving up the way we’ve elected Presidents, voters will gain more power and greater influence. Their votes will express what they truly value and, most importantly, they will gain genuine power to ensure our democracy overcomes the threat of dictatorship. 

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Plea Bargaining Essay

Type of paper: Essay

Topic: Social Issues , Discrimination , Crime , Innovation , Criminal Justice , Time Management , Supreme Court , Law

Published: 12/13/2019

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Plea Bargaining

Plea bargaining refers to case settlement that involves an arranged agreement between the prosecutor and the defendant. Along with possible conditions, the defendant agrees to plead guilty to some crime and not vice versa. These conditions may include benefits relating to punishment, dismissal of some charges or termination of a sentence. For a plea to hold, the accused must meet their part of the deal. Therefore, plea bargaining is different from civil law and requires separate treatment (Bibas, 2004). The most common forms of plea-bargaining are charge bargaining and sentence bargaining. Charge bargaining is the negotiation with the prosecutor for reduced charges or the severity of the criminal charges. Sentence bargaining is the process of negotiating for a favorable sentence directly with a judge (Turner, 2006).

This paper will analyze both merits and demerits of a plea bargain to the defendant, prosecution and the victims. First, a plea bargain helps save time and costs related to the trial and the defendant saves on legal fees (Feeler, 1979). If the court eliminate jail time, an individual can get back to work immediately, this avoids continued lose on income.

A defendant faced with multiple charges can end up spending many years behind bars. However, if they enter into a plea bargain their sentence could be reduced and in some cases even terminated. Fines could also be eliminated or reduced when a defendant cuts a deal with the prosecutor. By plea-bargaining, an individual avoids a trial; therefore, reduces his anxiety and tension. This is also advantageous to the defendants’ family and the victims because time-consuming trials can be a traumatic and stressful experience. The victims do not face the inconveniences of testifying while the prosecution need not worry of a possible acquittal.

Plea-bargaining also helps to avoid publicity considering trials are public records. Trials display to everyone the private and personal life of the defendant, which can be embarrassing and humiliating. Therefore, entering into a plea bargain helps to avoid any adverse or wanting situations. Plea bargaining has several disadvantages as shown herein. Plea bargain depends on the court decision and denies the defendant a right to appeal or challenge the sentence. Once the accused have signed the paperwork, they have officially accepted guilt regarding the crimes.

Plea bargaining could also be disadvantageous to innocent defendants. An individual may accept a plea bargain due to fear of conviction. It may even be used to coerce people into confession of crimes they did not commit. From these merits and demerits, it is necessary to analyse them carefully and legal help when faced with plea-bargain.

Operation of criminal justice relies on two main models-the crime control model and the due process model as indicated by Herbert Packer (1968). These two models conflict and compromise, hence they are always in competition. Crime control models concentrate on control of individual behaviors, and its operation borrows from a presumption of guilt. Crime control models primary focus is the achievement of efficiency in the process of criminal justice. Plea bargaining increases efficiency in crime control. Plea bargains are efficient because they can be administered and accepted in a relatively short time. This strategy focuses on the similar mechanism consequently it handles all cases uniformly. Lack of appeals in plea bargaining ensures that a decision cannot be challenged making it the most appropriate method of achieving efficiency. Presumption of guilt in crime control model is not always accurate and goes against the principle of consideration of innocence until proven guilty.

This paper finding does not support this system based on just punishment, rights and exercise of fairness. The process of allowing guilty criminals to plea bargain for lighter sentences is unjust especially where lenient punishments are administered. Plea-bargaining also leaves room for innocent people to admit guilt for crimes they did not commit. This system is unfair as it allows defendants to forfeit their right to trial. It also diminishes the public respect for the judicial system by allowing criminals to defeat justice. Therefore, it is necessary to reconsider trials as its alternative.

Bibas, S. (2004). ‘Plea bargaining outside the shadows of trial’,

Harvard Law Review 117, 2463-2547 Feeley, Malcolm M. (1979). The Process is the Punishment. New York:

Russell Sage Foundation Packer L. (1968). The limits of criminal Sanction. Stanford University Press

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Plea Bargaining: Positive and Negative Sides Essay

Introduction.

As the world develops and the gap between the haves and the have-nots increases, the likelihood of the disadvantaged in the society of committing crime is very high. To ensure that everybody lives comfortably, when an individual commits a crime there are no other options left apart from arresting the suspect and presenting him before a court of law to answer the charges. The court may find the suspect guilty or innocent of the offence accused of depending on the evidence provided before it.

The process of deciding whether you are guilty or innocent can be reached through two approaches: either through undergoing the full trial process or admitting to guilt through a plea bargaining process. If a suspect is sure that the provided evidence will end up with conviction, a trial process through plea bargaining is more preferable as most of the times the courts are lenient on the penalties imposed and if one had committed several crimes he is charged for some while in others he is set free. Plea bargaining approach serves as a time solving strategy both for the convict and the court. It is worth noting that in the recent past most of the court sentences in the United States of America have been through plea bargains. Most legal experts have attributed this to the reality that a complete crime trial involves many legal procedures, which need to be followed and thus wastage of time of all the parties involved (Weninger, 1987).

While some people may compare plea bargaining to an out of court settlement as in the civil process it should be noted that what happens here is only leniency otherwise acquittal is a hard thing to expect (Hall, Dolatowski, & Schmalleger, 2010).

An important fact to note is that bargained pleas are not done depending on the nature of the crime one committed rather on the sentence one is likely to be convicted if he pleads guilty to the crime without wasting the courts time and money with the investigation process. Other suspects may prefer plea bargaining when the magnitude of the crime they committed need to be lessened for a lighter sentence to follow, for example, if one kills another person the court may decide that he pleads guilty and be charged for manslaughter rather than taking a risk and undergo the whole trial process where if found guilty one will be convicted for murder and thus a longer sentence that may sometimes be a life sentence or death through the electric chamber.

It is a major concern in what would happen if following the game theory, all convicts pleaded not guilty. The courts would have backlog of cases and it would require the intervention of the state to hire or employ more judges in order to be able to solve all the cases. Not opposing or advocating for plea bargains some questions that rings in ones’ mind are who really benefits from plea bargaining and whose rights are undermined, are they for the accused or the defendant?

Who Benefits from Plea Bargaining

The main beneficiary of plea bargaining is the accused who through plea bargaining receives a lighter sentence than the expected if the whole trial process was conducted and the accused was found guilty (Vinegrad, 2010). Plea bargain also works as an advantage to administration since it reduces the workload for the judges, prosecutors, and the defense lawyers. Though this is beneficial to the court system and the government, law experts argue that it denies individual of his constitutional rights. The government officials use their power to force the accused in admitting to guilt (though yet innocent until proven guilty) and remove their rights of undergoing through a fair trial (Lynch, 2003).

Plea bargains also result in less publicity and fewer criminal records thus serving to the advantage of the accused as it is expected (Caldwell, 2010). Among the major disadvantages of plea bargaining is that sometimes innocent defendants can admit guilt due to the fear of the harsh sentence that might follow in case the courts convict him of any wrong doing (Miceli, 2009). The Alford Doctrine is another way in which plea bargaining is reached; this doctrine allows the judge to accept guilty pleas though the defendants maintain innocence or do not agree to the evidence presented before the court of law. Most of the times the defendant can admit guilt due to the fear that the jury may not believe him due to the evidence which has been provided to them (Schaller, nd).

Does Plea Bargaining Sacrifice the Defendant’s Rights or do the Guilty Benefit?

In some instances plea bargaining has been criticized on the fact that sometimes it undermines defendant rights due to the presumption of innocence and self incrimination. It also reduces the power of the court systems in that the system of justice is seen to be unfair as agreements to the negotiated deals lead to less sentences thus denying others justice while rewarding the criminals with less sentences (OECD, 2008).

The 5th amendment of the United States of America does not allow self incrimination under instructions while the 6th amendment ensures that every American citizen has a chance to face an impartial juries thus it beats common sense to our court systems why they should enter into a bargaining plea if one is not guilty. While one might be guilty and still the convicting evidence lack, most of the Americans who are accused of committing crimes forego these basic constitutional rights to plead guilty to cases which the courts might never be able to solve (Lynch, 2003). The truth behind plea bargaining is that it conflicts the provision of the supreme constitution in an effort to overlook institutional processes during trials (Sandefur, 2003).

Advantages of plea bargaining

From the perspective of the attorney representing the accused incase he is a state attorney representing a poor citizen who with the evidence presented has got no chances of escaping a conviction the government attorney can convince the defendant just to plea guilt thus solving him time of going through the whole court process as would be expected during a normal trial.

It reduces the possible maximum sentence for the defendant in case he would have been found guilty of the crimes he was accused of. Thus most suspects prefer plea bargaining since it lessens the time they are supposed to serve in correctional facilities.

Disadvantages

The major undoing of plea bargains is that it releases criminals soon to the streets than expected and to many a long court term serves as an incentive to prevent the accused of committing the crime again. In a contrasting way it may sometimes serve as advantage to the defendant since it ensures the families of the victims are served with justice no matter how little or demeaning it might be since a smart lawyer can convince the jury that even the most wanted criminals are innocent and then the persons are acquitted of any wrong doing (Rein, 2007).

To a hardened criminal, whose chances of recidivism are high plea bargaining serves as a disadvantage to the public as the criminal will be released soon from the prison going back to the public where he may re-commit the crime or even commit a more serious crime this time around. In another perspective of trying to understand who really benefits from a plea bargain.

To the family or the person to whom the crime was committed they can only feel that justice has been done if the a defendant receives the maximum sentence however through bargaining pleas justice is not served as these criminals receive lesser sentences and sooner or later they are released from the prisons and they might go and repeat the crime again.

Though plea bargaining may serve to the advantage of many, from the accused to the court system, minimum sentences for certain criminal acts such as rape and drug abuse should be enacted to ensure even after a plea bargaining the friends and families of the victims feels that they have been served by justice.

Reference List

Caldwell, D.S. (2010). The Benefits of Plea Bargaining . Web.

Hall, E. D; Dolatowski, J.J., & Schmalleger, F. (2010). Criminal Law Today, Fourth Edition . New York: Pearson Education

Lynch, T. (2003). The Case against Plea Bargaining: Cato Institute’s Project on Criminal Justice . Web.

Miceli, T. J. (2009). Plea Bargaining and Settlement of Cartel Cases . Web.

Rein, P. (2007). Who Really Benefits from a Plea Bargain? Web.

Sandefur, T. (2003). I n Defense of Plea Bargaining. Web.

Schaller, J. (n.d.). State v. Faraday—DISSENT. Web .

Vinegrad, A. (2010). Justice Department’s new charging: Plea Bargaining and New Sentencing Policy. New York Law Journal volume 243- No. 110 .

Weninger, R. (1987). The Abolition of Plea Bargaining: A Case Study of El Paso County, Texas . Web.

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Mr. Trump has boasted about appointing three of the Supreme Court justices who overturned Roe. But until Tuesday, he had tried hard to avoid saying what he would do if re-elected, even as his allies went public with their hope that he would use executive actions to effectively ban abortion without legislation.

President Biden’s campaign quickly responded to Mr. Trump’s interview with a statement from Amanda Zurawski, who was initially denied an abortion in Texas despite life-threatening complications and is one of several women suing over Texas’ abortion ban.

“My family has been forever altered by the nightmare that Donald Trump created by overturning Roe,” Ms. Zurawski said, adding, “Trump isn’t ‘signaling,’ he isn’t ‘suggesting,’ he isn’t ‘leaning toward’ anything — he is actively planning to ban abortion nationwide if he’s elected, inflicting the same cruelty and chaos I’ve experienced on the entire country.”

Chris Cameron and Jonathan Weisman

Chris Cameron reported from Washington and Jonathan Weisman from Columbus, Ohio.

Four takeaways from the biggest primary night since Super Tuesday.

It was the biggest primary night since Super Tuesday, and there were few surprises in the results.

Bernie Moreno won the Republican Senate primary in Ohio, wielding the powerful endorsement of former President Donald J. Trump to become the Republican nominee in perhaps the most consequential race in the battle for the Senate this November.

Three incumbent representatives also fended off primary challenges in Illinois, and the results of a special primary in California will, eventually, decide who completes the term of former House Speaker Kevin McCarthy, who was ousted from his post last year and left Congress not long after.

Here are four takeaways.

With the power of Trump, Moreno prevails in Ohio.

Bernie Moreno, a wealthy former car dealer and political newcomer, emerged victorious from a three-way brawl in the Ohio Republican primary to determine who would take on Sherrod Brown, the Democratic incumbent, in an increasingly Republican state.

The hotly contested primary proved once again just how powerful an endorsement from Mr. Trump is, especially in a state like Ohio. The former president backed Mr. Moreno early, while the Republican establishment tried mightily to lift its chosen candidate, Matt Dolan, a wealthy state senator.

But the star power of Ohio’s Republican governor, Mike DeWine, and its former moderate senator, Rob Portman, was decisively outshone by Mr. Trump. Mr. Moreno cruised to victory, earning a narrow majority of the vote in a three-way race .

Democratic and Republican incumbents claim victory in Illinois.

Three incumbent representatives in Illinois — two Democrats and a Republican — faced significant challengers in Tuesday’s primary, and all three congressmen survived — demonstrating the power of incumbency.

Representative Danny Davis won by a wide margin in the Democratic primary for the Seventh Congressional District. He has represented a swath of Chicagoland for nearly 28 years. He is also 82 years old, and faced a number of younger opponents who were ultimately swept aside after the Democratic establishment in Illinois rallied around Mr. Davis.

Representative Jesús García, a progressive Democrat known as Chuy, won by a wide margin in the Democratic primary in the Fourth Congressional District in Chicago, beating his opponent, Raymond Lopez, in a landslide. The race was fought in part over immigration issues. Mr. García, who has called himself a “proud immigrant,” criticized President Biden when he referred to an undocumented migrant as “an illegal” in his State of the Union speech . Mr. Lopez was more conservative on immigration.

The third incumbent, Representative Mike Bost, won his Republican primary in the 12th Congressional District. Here, Mr. Trump again became a factor. Mr. Bost is nobody’s idea of a moderate Republican, and had Mr. Trump’s endorsement, but he was nevertheless challenged from his right by Darren Bailey, an ardent pro-Trump Republican who lost the governor’s race to J.B. Pritzker by a wide margin in 2022.

Mr. Bailey claimed to be the true avatar of Mr. Trump’s movement, but Mr. Bost ultimately edged out Mr. Bailey.

Kevin McCarthy’s seat remains in limbo.

Vince Fong, a Republican state assemblyman, advanced in a special primary in California to complete the term of Mr. McCarthy, a Republican who was ousted from his role as speaker of the House and resigned soon after.

Mr. Fong did not hit the 50 percent threshold to avoid a runoff, and two other candidates were running close for second place, with votes still outstanding: Mike Boudreaux, another Republican and the Tulare County sheriff, and Marisa Wood, a Democrat and teacher. The runoff election is scheduled for May 21.

Mr. Fong and Mr. Boudreaux advanced in a separate primary held on Super Tuesday for a full term in the seat starting January 2025.

Trump and Biden notched huge victories, as expected.

Mr. Biden and Mr. Trump, the presumptive presidential nominees of their parties, swept to near-total victories in the states that held primaries on Tuesday: Arizona, Florida, Illinois, Kansas and Ohio.

But the results still reflected a small but significant resistance in each party to their presumptive candidates.

Mr. Trump achieved overwhelming margins of victory, winning at least 75 percent of the vote in every state as of early Wednesday. Nikki Haley, who dropped out of the race after Super Tuesday, took notable minorities of the vote in each primary. Her best showing was in Arizona .

Mr. Biden took an even larger percentage of the vote in the Democratic primaries, winning at least 83 percent of the vote in each state as of early Wednesday. But some voters still registered their discontent with his candidacy. In Ohio, 13 percent voted for Representative Dean Phillips , who dropped out and endorsed Mr. Biden after Super Tuesday. In Kansas, more than 10 percent voted for the “none of the names shown” ballot option.

Kellen Browning

Reporting from Phoenix

In Arizona, Democrats could see opportunity in an 1864 abortion ban.

Democrats in Arizona are eager for a fight over abortion access in the state, a political battleground where they’ll need every advantage to support President Biden and hang on to a key Senate seat.

But the battle lines have grown increasingly muddled amid a heated legal dispute over which Republican-backed restrictions will be on the books come November.

After the party ushered in a 15-week abortion ban in 2022 with almost no exceptions, with support from anti-abortion groups, some Republicans are now trying to get that law tossed. They instead favor an even more restrictive law dating to the 1800s that effectively bans the procedure entirely. And some Democrats, though they are strongly against both measures, are quietly acknowledging that a near-total ban could be a boon as they look to inspire voters to turn out.

Since the Supreme Court’s decision in the Dobbs case, overturning of Roe v. Wade and effectively returning the issue for states to decide, voters have come out in force to overwhelmingly back measures aimed at protecting abortion access, even in Republican-led states. And if the stricter ban is upheld, “there’s probably a benefit” for Democrats campaigning on abortion access, said Tresa Undem, a public opinion researcher who studies abortion.

“Certainly, if there’s a total ban, voters are going to be mobilized on this issue,” Ms. Undem said.

The unusual dynamic stems from various courts’ interpretations of Arizona’s 15-week ban, signed by former Gov. Doug Ducey a few months before the Dobbs ruling doing away with a constitutional right to abortion. Republicans and advocates of the 15-week ban had intended for the legislation to give way to restrictions enacted in 1864, when Arizona was still a territory.

That law, which mandates prison time for anyone who helps a woman obtain an abortion and does not include exceptions for rape or incest, went back into effect in Arizona shortly after Roe was overturned, when a district court judge said that it should take precedent over the 15-week ban. But an appeals court said months later that doctors could not be prosecuted under the territorial law, effectively allowing them to begin performing abortions again up to 15 weeks.

Now, attention shifts to the Arizona Supreme Court, which is set to issue a final ruling on the dueling abortion bans — likely by this summer — after anti-abortion groups appealed the lower court decision.

Democrats in Arizona are well aware of the political ramifications; a more restrictive law seems more likely to drive voters who are in favor of abortion access to the polls, which could propel Democrats into office. But few in the state are willing to openly acknowledge the political calculus, and Democrats emphasized that the real-life consequences of women losing access to abortion far outweighed any strategic judgments.

“Would it be easier to run on if there was a total abortion ban in Arizona? Sure, but that would be cataclysmically bad for the next nine months for the women of Arizona and that’s just not something that I want to see happen in any way, shape or form,” said Conor O’Callaghan, who is running in the Democratic primary to challenge Representative David Schweikert, a Republican from a district northeast of Phoenix.

Separately, abortion rights groups in Arizona are gathering signatures for a ballot measure that would enshrine abortion access until “fetal viability,” or about 24 weeks, in the state constitution, returning to the standard set by Roe v. Wade. The coalition, Arizona for Abortion Access, announced in January that it had already collected 250,000 signatures. The effort needs close to 400,000 by July to get on the ballot and put the question to voters this fall.

Opponents of the measure argue the proposed language is too broad and would “slash common-sense safety standards and precautions,” said Olivia Escovedo, a spokeswoman for It Goes Too Far, the campaign fighting the measure.

Advocates say they are confident that Arizonans would approve the measure if put to a vote. Dawn Penich, a spokeswoman for Arizona for Abortion Access, said she had heard from people who said that they wanted the government to stay out of their health care decisions.

“This is a human rights issue, this is a women’s rights issue,” Ms. Penich said. “In Arizona, people really value their freedoms and their autonomy.”

Arizona Democrats could see a benefit at ballot box because of the prominence of the abortion debate, said Christine Matthews, a national pollster who specializes in surveying female voters in swing states. But it may not be a silver bullet. When abortion access measures have appeared on the ballot in recent elections, the issue has drawn moderate and conservative voters to the polls in larger numbers, cutting across party lines.

“A total ban brings a much broader coalition out to reverse that, but those centrist to center-right to Republican voters may say, ‘A total ban is extreme, but that doesn’t mean I’m going to vote for Biden,’” Ms. Matthews said.

Either way, Democrats are leaning heavily into their support for abortion access, while Republicans try to pivot on the issue. Kari Lake, the Trump ally who ran for governor in 2022 and once called abortion the “ultimate sin,” is now against a federal abortion ban . In an interview with NBC News this month , Ms. Lake, who is running for Senate, praised the 15-week ban but also seemed to express openness to the proposed ballot measure’s abortion limit. (Ms. Lake’s opponent, Representative Ruben Gallego, a Democrat, has vowed to protect abortion access and hammered Ms. Lake repeatedly for her past comments.)

And Mr. Schweikert, who cosponsored a bill in Congress that would have amounted to a federal abortion ban, expressed support for in vitro fertilization treatments in February after an Alabama court ruled that frozen embryos should be legally considered children, imperiling the practice. Some feared that moving to restrict I.V.F., popular fertility treatment, would be a natural consequence of the Dobbs decision, but Republicans have largely been quick to stake out positions in favor of I.V.F.

Cathi Herrod, the president of the Center for Arizona Policy, a conservative lobbyist group that has backed both of Arizona’s abortion bans, said she expected voters would oppose widening access to abortion in the state in November.

“Once Arizonans learn the extreme nature of this amendment, Arizonans will reject it soundly,” Ms. Herrod said, adding that they will “see that it does not reflect their position on abortion.”

The abortion debate has also divided Arizona’s State Legislature, which Republicans control by razor-thin margins in both chambers.

Eva Burch, a Democratic state senator, put the abortion debate in searingly personal terms during a speech on the floor on Monday , detailing the barriers she faced when she tried to get an abortion for a recent pregnancy that she learned has no chance of survival.

“My medical provider was forced to tell me multiple things that don’t apply to my situation, and some that are just transparently factually false, and they do this because of laws passed by this Legislature, in opposition to medical testimony and advice,” Ms. Burch said. “From where I sat, the only reason I had to hear these things was in a cruel and really uninformed attempt by outside forces to shame and coerce and frighten me.”

Katie Rogers

Katie Rogers covered the Trump and Biden administrations and frequently reported on Melania Trump’s East Wing.

In a rare appearance, Melania Trump does not say whether she will campaign for her husband.

When the former president cast his vote in the Florida primary election on Tuesday, the former first lady was by his side.

This was notable for a few reasons.

Former President Donald J. Trump has said for months that his wife, Melania, would join him on the campaign trail. And for months, Mrs. Trump remained absent from campaign events and victory celebrations — after Mr. Trump cruised to a victory on Super Tuesday, his wife did not join him onstage to greet supporters at Mar-a-Lago, their home in Palm Beach, Fla.

Always more content to be a cipher to the curious public than she is to gamely field questions, Mrs. Trump did something out of character when she replied to someone who asked whether she planned to be a more regular presence going forward.

“Stay tuned,” she said.

It was a reply, but not an answer.

(“That’s the answer she gives when she doesn’t want to commit to anything,” Stephanie Grisham, her former communications director who wrote a memoir about the Trump White House, said in a text message.)

Mrs. Trump, 53, has formally been a political spouse for almost a decade, but she has shown little interest in campaigning, despite her popularity as a surrogate for her husband.

Her public appearances in recent months have been sparse, and they have not been in the service of her husband’s campaign.

One of her most notable was to deliver a eulogy for her mother, Amalija Knavs, who died in January. In that rare speech, Mrs. Trump, who was close enough to her mother that Mrs. Knavs and her husband, Viktor, often lived in a suite at the White House, described her mother as “a ray of light in the darkest of days.”

Before that, Mrs. Trump, a naturalized U.S. citizen, attended a naturalization ceremony in December and told participants that citizenship “means actively participating in the democratic process and guarding our freedom.” (Mrs. Trump received an immigrant visa reserved for “individuals with extraordinary ability” in 2001, when she was a model, and the circumstances surrounding her immigration process came under scrutiny when she was first lady.)

And in November, she joined the other living first ladies at a memorial service for the former first lady Rosalynn Carter.

On Tuesday, Mr. Trump told people gathered outside the polling location in Palm Beach that he had voted for himself. A spokeswoman for Mrs. Trump did not immediately respond to a request for information about the former first lady’s vote.

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