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Strategic bargaining with firm inventories

Coles, M and Smith, E (1998) 'Strategic bargaining with firm inventories.' Journal of Economic Dynamics and Control, 23 (1). 35 - 54. ISSN 0165-1889

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This paper characterizes how a firm's opportunity to sell from its stock of inventories affects the outcome of strategic wage negotiations with a union of workers. In equilibrium, the union and firm share the benefits from an immediate return to work less the costs of a strike of infinite duration. This outcome is equivalent to a Nash bargaining solution in which the threat points are the agents' expected payoffs should a strike last forever. We also demonstrate that for a given level of inventories, the wage increases when demand is high. Conversely, given demand, the wage falls as inventories rise.

Item Type: Article
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 29 Jun 2012 11:41
Last Modified: 25 May 2020 10:15

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