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Inventories and Strikes

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  • Clark, Simon

Abstract

This paper analyzes a dynamic model of bargaining and strikes in which the reservation wage of union members in each period is private information. The model endogenizes the firm's decision to accumulate inventories of finished goods in order to enhance its bargaining position. With higher inventories, the firm makes a lower wage offer, thereby accepting an increased probability of a strike. The model can help explain empirical results that have found a positive correlation between wages and inventory accumulation. It also shows that, unless inventories are controlled for, strike incidence will exhibit a spurious negative state dependence. Copyright 1997 by The London School of Economics and Political Science

Suggested Citation

  • Clark, Simon, 1997. "Inventories and Strikes," Economica, London School of Economics and Political Science, vol. 64(256), pages 645-667, November.
  • Handle: RePEc:bla:econom:v:64:y:1997:i:256:p:645-67
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    Cited by:

    1. William H. Greene & Ana P. Martins, 2002. "Striking Features of the Labor Market," EERI Research Paper Series EERI RP 2002/08, Economics and Econometrics Research Institute (EERI), Brussels.
    2. William H. Greene & Ana P. Martins, 2013. "Striking Features of the Labor Market: Empirical Evidence," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(2), pages 25-53.
    3. William H. Greene & Ana P. Martins, 2013. "Striking Features of the Labor Market: Theory," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 56(2), pages 1-24.

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