What Is Bargaining?

The process of negotiations between two or more parties to reach an agreement, often involving pricing, purchasing terms, and working conditions. See also Collective Bargaining and Pattern Bargaining.

Bargaining is a process of negotiation between two or more parties with the aim of reaching a mutually agreeable solution. This practice is common in various settings, including marketplaces, labor-management negotiations, business contracts, and international trade agreements. Bargaining can involve negotiating for better prices, contract terms, working conditions, or other financial or operational considerations.

Types of Bargaining

Distributive Bargaining

Distributive bargaining, also known as positional bargaining, involves parties assuming fixed positions and negotiating on who receives the bigger or smaller portion. This form of bargaining often results in a win-lose situation.

Integrative Bargaining

Integrative bargaining, or interest-based bargaining, focuses on mutual benefits. Parties collaborate to find a win-win solution that addresses the needs and interests of all involved. This type aims for a cooperative atmosphere leading to better relationships in the long run.

Collective Bargaining

This form of bargaining is specifically between employers and a group of employees aimed at establishing wage levels, working conditions, and other aspects of employment. It often involves trade unions representing workers.

Pattern Bargaining

Pattern bargaining is a strategy wherein a labor union negotiates a contract with one employer and then uses the terms of that contract as a benchmark for negotiations with other employers in the same industry. This approach aims to create industry-wide standards.

Special Considerations in Bargaining

• Power Dynamics: The relative power of each party can significantly influence the outcome of bargaining. Power can derive from various factors, such as legal rights, economic leverage, and negotiation skills.
• Communication Skills: Effective bargaining necessitates clear, concise communication and good listening skills.
• Cultural Factors: Cultural differences can shape expectations and negotiation behaviors. Being mindful of cultural nuances can facilitate smoother negotiations.
• Legal Framework: Local regulations and laws can impose requirements on the bargaining process, particularly in collective bargaining scenarios.

Examples of Bargaining

• Market Bargaining: Haggling over the price of goods in a marketplace.
• Employee Negotiations: Employees negotiating their salary and benefits packages with an employer.
• International Trade: Countries negotiating terms of trade agreements.
• Contractual Agreements: Businesses negotiating terms of contracts with suppliers or clients.

Historical Context

Historically, bargaining has been a critical aspect of commerce, labor relations, and governance. From medieval guilds negotiating trade terms to modern collective bargaining agreements, the principles of negotiation have evolved, influenced by economic theories, legal frameworks, and social dynamics.

Applicability

• Economic Policy: Governments use bargaining in diplomatic and trade scenarios.
• Labor Relations: Unions and employers engage in collective bargaining.
• Business Management: Companies negotiate contracts, mergers, and acquisitions.
• Everyday Life: Consumers and sellers haggle over prices in daily transactions.

Related Terms

• Negotiation: The broader process of discussing to reach an agreement.
• Mediation: A process where a neutral third party helps resolve disputes through negotiation.
• Arbitration: A binding decision-making process that resolves disputes outside the courts.

FAQs

What is the difference between distributive and integrative bargaining?

Distributive bargaining involves fixed positions with a win-lose outcome, while integrative bargaining focuses on mutual benefits and win-win solutions.

How does collective bargaining work?

Collective bargaining is a process where employers and a group of employees (often represented by a union) negotiate to establish employment terms such as wages, working conditions, and benefits.

Can bargaining occur without face-to-face communication?

Yes, bargaining can occur through various mediums, including phone, email, and video conferencing. The critical element is the exchange of offers and counteroffers.

References

1. Fisher, R., Ury, W., & Patton, B. (1991). Getting to Yes: Negotiating Agreement Without Giving In. Penguin Books.
2. Lewicki, R. J., Barry, B., & Saunders, D. M. (2015). Negotiation. McGraw-Hill Education.
3. Walton, R. E., & McKersie, R. B. (1965). A Behavioral Theory of Labor Negotiations: An Analysis of a Social Interaction System. Cornell University Press.

Summary

Bargaining is a fundamental process in various domains, including economics, labor relations, and daily transactions. It involves negotiation to reach mutually acceptable agreements and can take different forms, such as distributive, integrative, collective, and pattern bargaining. Understanding the dynamics and strategies of bargaining can lead to more effective negotiation outcomes and better relationships between the parties involved.