This paper examines the introduction of monopolistic competition
 into wage bargaining models: in addition to capital-labour
 substitution, we also consider a cost-push effect. The
 right-to-manage model requires strong restrictions on the
 objective functions and leads to problematic conclusions because
 the wage claims of the union are generally not compatible with the
 mark-up requirement contained in the firm's price equation. In the
 efficient bargaining model, the union negotiates also the
 employment level, which gives it a way of extracting part of the
 monopoly rent: the firm's commitment to an efficient
 wage-employment combination forces it to follow a pricing rule
 such that part of the surplus is transferred to the union.