A Bargaining Analysis of American Labor Law and the Search for Bargaining Equity and Industrial Peace

In this article, I present an alternative economic analysis of unions and collective bargaining that utilizes recent advances in labor economics and some simple applications of game theory to address the deficiencies of the traditional monopoly model.

The article proceeds in four parts. In Part I, I provide a brief primer on the economic analysis of unions and collective bargaining. I discuss the various possible sources of union wage increases, possible employer responses to union wage demands, and alternative models of the costs of collective bargaining. In Part II, I outline the traditional monopoly theory of unions by combining the appropriate elements of the model discussed in the primer on economic analysis. I present both the theoretical implications of the traditional economic analysis for American labor law and a critique of this analysis from an economic perspective. In Part III, I describe my alternative bargaining analysis by combining the alternate elements of a model of unions and collective bargaining presented in the primer on economic analysis. Once again I examine the implications of economic analysis for American labor law, although this time with very different results. Finally, I present my conclusions about American labor law based on my analysis.