Collective bargaining is still the main vehicle worldwide for labor to negotiate with management in both the public and private sectors. This book presents a new theoretical model of union bargaining. It challenges the commonly held view that collective bargaining has a negative impact on economic welfare and argues that with the existence of market failure, collective bargaining can be welfare enhancing. This book will be a research resource for scholars, professionals and policymakers and supplementary reading for upper-level courses in labor economics, public economics, game theory and international economics.