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The Strategic Use of Inventories in an Infinite Horizon Model of Wage and Employment Bargaining

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  • Clark, Simon

Abstract

Inventories strengthen a firm's bargaining position in wage and employment negotiations. The model isolates this strategic motive for holding inventories. In a steady state, employment and output are lower, but not necessarily wages. Welfare effects are ambiguous: compared to a set-up where inventory accumulation is not possible, steady state union utility is lower, but if the firm starts from a zero level of inventories, then the union may be better off. Steady state profits may be higher or lower, and the firm may be better off or worse off if it starts from zero inventories. Copyright 1993 by Scottish Economic Society.

Suggested Citation

  • Clark, Simon, 1993. "The Strategic Use of Inventories in an Infinite Horizon Model of Wage and Employment Bargaining," Scottish Journal of Political Economy, Scottish Economic Society, vol. 40(2), pages 165-183, May.
    • Handle: RePEc:bla:scotjp:v:40:y:1993:i:2:p:165-83
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    Cited by:

    1. Sabien Dobbelaere & Jacques Mairesse, 2013. "Panel data estimates of the production function and product and labor market imperfections," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 28(1), pages 1-46, January.
    2. Smith, Jennifer C., 1996. "Bargaining power and local labour market in°uences on wage determination," Economic Research Papers 268704, University of Warwick - Department of Economics.
    3. Jennifer C. Smith, 1996. "Effet du pouvoir de négociation et du marché local du travail sur la détermination des salaires," Économie et Prévision, Programme National Persée, vol. 126(5), pages 1-17.
    4. repec:lic:licosd:13603 is not listed on IDEAS

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