IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp10723.html
   My bibliography  Save this paper

How Asymmetrically Increasing Joint Strike Costs Need Not Lead to Fewer Strikes

Author

Listed:
  • Pantsios, Archontis L.

    (Liverpool Hope University)

  • Polachek, Solomon

    (Binghamton University, New York)

Abstract

The "joint costs" model states that the incentive to strike is inversely related to the total costs associated with workers' and firms' strike activities. Not only has this model been tested with mixed results, but also the joint costs model is problematic in explaining several stylized facts in the strike literature because higher strike costs do not always yield a lower incidence of strike activity. This paper illustrates how the joint cost model can yield these counterintuitive results. It shows that strike incidence need not decrease when joint strike costs increase. The innovation is to raise union and firm joint strike costs in an asymmetric way. Increasing a particular side's strike costs necessarily decreases its incentive to strike. However, in response, the other side's incentive can increase, since under a number of circumstances it holds out with a higher probability in order to collect the relatively larger expected rents coming about because the other side's implicit threat point decreases. To illustrate this, we model contract negotiations as a simple one-period game. (No need for more complex repeated games such as attrition since our point is only to show as simply as possible why the joint-costs model yields ambiguous results.) We use standard Hicksian concession curves to derive a payoff matrix. The payoff matrix results in contract negotiations following along the lines of a "game of chicken". The solution to the game yields no one stable pure Nash-equilibrium strategy, but instead a mixed strategy so that choices become probabilistic depending upon union and firm concession curve parameters. The results indicate that increasing either party's strike costs can have ambiguous effects on strike incidence. This ambiguity may explain why higher strike costs need not always lead to fewer strikes, and thus may account for the mixed success observed in studies that empirically test the joint costs model with strike incidence data. Although couched in terms of strikes, the results are equally applicable to other negotiation situations.

Suggested Citation

  • Pantsios, Archontis L. & Polachek, Solomon, 2017. "How Asymmetrically Increasing Joint Strike Costs Need Not Lead to Fewer Strikes," IZA Discussion Papers 10723, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10723
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp10723.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ana Mauleon & Vincent Vannetelbosch, 1999. "Profit sharing and strike activity in Cournot oligopoly," Journal of Economics, Springer, vol. 69(1), pages 19-40, February.
    2. Daphne Nicolitsas, 2000. "Accounting for Strikes: Evidence from UK Manufacturing in the 1980s," LABOUR, CEIS, vol. 14(3), pages 417-440, September.
    3. Card, David, 1990. "Strikes and Bargaining: A Survey of the Recent Empirical Literature," American Economic Review, American Economic Association, vol. 80(2), pages 410-415, May.
    4. Robert Pollin & Michael Stone, 1991. "Analysis," Challenge, Taylor & Francis Journals, vol. 34(1), pages 53-57, January.
    5. Dennis R. Maki, 1986. "The Effect of the Cost of Strikes on the Volume of Strike Activity," ILR Review, Cornell University, ILR School, vol. 39(4), pages 552-563, July.
    6. Vroman, Susan B, 1989. "A Longitudinal Analysis of Strike Activity in U.S. Manufacturing: 1957-1984," American Economic Review, American Economic Association, vol. 79(4), pages 816-826, September.
    7. Oswald, A. J., 1995. "Efficient contracts are on the labour demand curve: Theory and facts," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
    8. Petrakis, Emmanuel & Vlassis, Minas, 2000. "Endogenous scope of bargaining in a union-oligopoly model: when will firms and unions bargain over employment?," Labour Economics, Elsevier, vol. 7(3), pages 261-281, May.
    9. Timothy C. G. Fisher, 1991. "An Empirical Study of the Adverse Selection Model of Strikes," Canadian Journal of Economics, Canadian Economics Association, vol. 24(3), pages 499-516, August.
    10. Reder, Melvin W & Neumann, George R, 1980. "Conflict and Contract: The Case of Strikes," Journal of Political Economy, University of Chicago Press, vol. 88(5), pages 867-886, October.
    11. Cynthia L. Gramm, 1987. "New Measures of the Propensity to Strike during Contract Negotiations, 1971–1980," ILR Review, Cornell University, ILR School, vol. 40(3), pages 406-417, April.
    12. John Godard, 2011. "What Has Happened to Strikes?," British Journal of Industrial Relations, London School of Economics, vol. 49(2), pages 282-305, June.
    13. Vannetelbosch, Vincent J., 1997. "Wage bargaining with incomplete information in an unionized Cournot oligopoly," European Journal of Political Economy, Elsevier, vol. 13(2), pages 353-374, May.
    14. Fernandez, Raquel & Glazer, Jacob, 1991. "Striking for a Bargain between Two Completely Informed Agents," American Economic Review, American Economic Association, vol. 81(1), pages 240-252, March.
    15. Jean-Michel Cousineau & Robert Lacroix, 1986. "Imperfect Information and Strikes: An Analysis of Canadian Experience, 1967–82," ILR Review, Cornell University, ILR School, vol. 39(3), pages 377-387, April.
    16. J. R. Hicks, 1963. "The Theory of Wages," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-349-00189-7.
    17. Bruce E. Kaufman & Jorge Martinez-Vazquez, 1988. "Voting for Wage Concessions: The Case of the 1982 GM-UAW Negotiations," ILR Review, Cornell University, ILR School, vol. 41(2), pages 183-194, January.
    18. Ashenfelter, Orley & Johnson, George E, 1969. "Bargaining Theory, Trade Unions, and Industrial Strike Activity," American Economic Review, American Economic Association, vol. 59(1), pages 35-49, March.
    19. Kennan, John & Wilson, Robert, 1989. "Strategic Bargaining Models and Interpretation of Strike Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 4(S), pages 87-130, Supplemen.
    20. Peter Ingram & David Metcalf & Jonathan Wadsworth, 1993. "Strike Incidence in British Manufacturing in the 1980s," ILR Review, Cornell University, ILR School, vol. 46(4), pages 704-717, July.
    21. Forsythe, Robert & Kennan, John & Sopher, Barry, 1991. "An Experimental Analysis of Strikes in Bargaining Games with One-Sided Private Information," American Economic Review, American Economic Association, vol. 81(1), pages 253-278, March.
    22. Sopher, Barry, 1990. "Bargaining and the Joint-Cost Theory of Strikes: An Experimental Study," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages 48-74, January.
    23. Geraghty, Thomas M. & Wiseman, Thomas, 2008. "Wage strikes in 1880s America: A test of the war of attrition model," Explorations in Economic History, Elsevier, vol. 45(4), pages 303-326, September.
    24. Farber, Henry S, 1978. "Bargaining Theory, Wage Outcomes, and the Occurrence of Strikes: An Econometric Analysis," American Economic Review, American Economic Association, vol. 68(3), pages 262-271, June.
    25. Martin J. Mauro, 1982. "Strikes as a Result of Imperfect Information," ILR Review, Cornell University, ILR School, vol. 35(4), pages 522-538, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Diego Velásquez Orellana & Domingo Pérez & Sebastián Link, 2022. "What tactical repertoire to use in strikes and when to use it? Strategies of workers and their mobilization power in Chile (2010–2018)," British Journal of Industrial Relations, London School of Economics, vol. 60(1), pages 78-98, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kyung nok Chun & Zachary Schaller & Stergios Skaperdas, 2020. "Why Are There Strikes?," Revue d'économie politique, Dalloz, vol. 130(6), pages 929-956.
    2. 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.
    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.
    4. Miguel Malo & Nuria Sánchez-Sánchez, 2014. "The legal form of labour conflicts and their time persistence: an empirical analysis with a large firms’ panel," European Journal of Law and Economics, Springer, vol. 38(3), pages 513-533, December.
    5. Peter Cramton & Morley Gunderson & Joseph Tracy, 1999. "The Effect Of Collective Bargaining Legislation On Strikes And Wages," The Review of Economics and Statistics, MIT Press, vol. 81(3), pages 475-487, August.
    6. repec:eee:labchp:v:2:y:1986:i:c:p:1091-1137 is not listed on IDEAS
    7. 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.
    8. Silviano Esteve Pérez & Mariluz Marco Aledo & María Engracia Rochina Barrachina, 2006. "A Competing Risks Analysis of Strike Duration in Spain: Agreement and Non-Agreement Outcomes," Revista de Economía Laboral - Spanish Journal of Labour Economics, Asociación Española de Economía Laboral - AEET, vol. 3, pages 14-45.
    9. Gabriele Ruiu, 2014. "The Role of Trust in Determining the Propensity to Join Unofficial Strikes," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 8(3), pages 125-148, December.
    10. Peter Cramton & Joseph Tracy, 2003. "Unions, Bargaining and Strikes," Papers of Peter Cramton 02ubs, University of Maryland, Department of Economics - Peter Cramton, revised 05 Sep 2002.
    11. Stefan Houpt & Juan Carlos Rojo Cagigal, 2012. "‘You can't start a fire without a spark’: strikes and class struggle in the Basque Country, 1914-36," Working Papers 12012, Economic History Society.
    12. repec:eee:labchp:v:2:y:1986:i:c:p:1039-1089 is not listed on IDEAS
    13. Stefan Oliver Houpt & Juan Carlos Rojo Cagigal, 2014. "Relative deprivation and labour conflict during Spain’s industrialization: the Bilbao estuary, 1914–1936," Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 8(3), pages 335-369, September.
    14. Gary-Bobo, Robert J. & Jaaidane, Touria, 2014. "Strikes and slowdown in a theory of relational contracts," European Journal of Political Economy, Elsevier, vol. 36(C), pages 89-116.
    15. Milner, S., 1995. "Industrial disputes and the law in Spain," LSE Research Online Documents on Economics 20710, London School of Economics and Political Science, LSE Library.
    16. Benoît Lyrette & Paul-Martel Roy, 1992. "Le régime des décrets favorise-t-il la paix industrielle? L'expérience des activités manufacturières québécoises, 1980-1988," Canadian Public Policy, University of Toronto Press, vol. 18(3), pages 261-274, September.
    17. Edward L. Glaeser & Cass R. Sunstein, 2015. "A Theory of Civil Disobedience," NBER Working Papers 21338, National Bureau of Economic Research, Inc.
    18. Lesch, Hagen, 2001. "Arbeitskämpfe im internationalen Vergleich: Trends und Einflussfaktoren," IW-Trends – Vierteljahresschrift zur empirischen Wirtschaftsforschung, Institut der deutschen Wirtschaft (IW) / German Economic Institute, vol. 28(3), pages 5-27.
    19. Cramton, Peter C & Tracy, Joseph S, 1994. "The Determinants of U.S. Labor Disputes," Journal of Labor Economics, University of Chicago Press, vol. 12(2), pages 180-209, April.
    20. Alex Lehr & Agnes Akkerman & René Torenvlied, 2015. "Spillover and conflict in collective bargaining: evidence from a survey of Dutch union and firm negotiators," Work, Employment & Society, British Sociological Association, vol. 29(4), pages 641-660, August.
    21. Charness, Gary & Kuhn, Peter, 2011. "Lab Labor: What Can Labor Economists Learn from the Lab?," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 3, pages 229-330, Elsevier.
    22. Jean-Paul Azam & Claire Salmon, 2004. "Strikes and Political Activism of Trade Unions: Theory and Application to Bangladesh," Public Choice, Springer, vol. 119(3_4), pages 311-334, June.

    More about this item

    Keywords

    game of chicken; joint strike costs; strike activity;
    All these keywords.

    JEL classification:

    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp10723. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.