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Full-Text Articles in Business
Strikes And Holdouts In Wage Bargaining: Theory And Data, Peter Cramton, Joseph Tracy
Strikes And Holdouts In Wage Bargaining: Theory And Data, Peter Cramton, Joseph Tracy
Peter Cramton
We develop a private-information model of union contract negotiations in which disputes signal a firm’s willingness to pay. Previous models have assumed that all labor disputes take the form of a strike. Yet a prominent feature of U.S. collective bargaining is the holdout: negotiations often continue without a strike after the contract has expired. Production continues with workers paid according to the expired contract. We analyze the union’s decision to strike or hold out and highlight its importance to strike activity. Strikes are more likely to occur after a drop in the real wage or a decline in unemployment.
Strategic Delay In Bargaining With Two-Sided Uncertainty, Peter Cramton
Strategic Delay In Bargaining With Two-Sided Uncertainty, Peter Cramton
Peter Cramton
The role of strategic delay is analyzed in an infinite-horizon alternating-offer model of bargaining. A buyer and seller are engaged in the trade of a single object. Both bargainers have private information about their own preferences and are impatient in that delaying agreement is costly. An equilibrium is constructed in which the bargainers signal the strength of their bargaining positions by delaying prior to making an offer. A bargainer expecting large gains from trade is more impatient than one expecting small gains, and hence makes concessions earlier on. Trade occurs whenever gains from trade exist, but due to the private …