THE ECONOMIC EFFECT OF STRIKES ON THE SHAREHOLDERS OF NONSTRUCK COMPETITORS

Prior research has established that strikes incur significant economic losses for the struck firms. This event study of intraindustry strike effects in highly concentrated industries focuses on two samples: fir ms that experienced a strike involving 1,000 or more workers between 1 982 and 1990, and the nonstruck firms that were their closest competit ors. Contrary to the prediction of some models that the economic losse s incurred by struck firms are captured by their nonstruck competitors , the results indicate that the total spillover from shareholders of t he struck firms to shareholders of the nonstruck competitors in this s ample was not statistically significant. The authors speculate that th e struck firms were able to limit spillover effects through such tacti cs as stockpiling inventory before a strike. Also, concessions by labo r, which were common outcomes of collective bargaining during the samp le period, probably significantly reduced the struck firms' total stri ke cost.