Abstract

In this paper we integrate the dynamic models formulated by the microeconomic theory of trade unions and the differential games approach. We demonstrate that the results of the dynamic monopoly union model, elaborated by Kidd and Oswald (1987) and Jones and McKenna (1994), can be obtained as solutions of a Stackelberg differential game between a firm and a union under particular assumptions on union's membership dynamic. We then turn our attention to the cooperative bargaining case, and we show how the optimal threat strategies can be determined, allowing to calculate the threat point payoffs.