The Effects of Airline Strikes on Struck and Nonstruck Carriers

T h i s study provides new evidence on the industrywide impact of strikes by investigating how strikes have affected t h e values of struck a n d nonstruck airlines.Using stock market data f o r the years 1963-86, t h e authors show that most strikes adversely affected t h e value of struck airlines' stock b u t enhanced the stock value of nonstruck carriers.The results also show that strikes before October 1978, which marked t h e e n d of strict regulation of t h e industry a n d of the employers' mutual aid pact, h a d s o m e effects different f r o m those of strikes after that date.A N important conclusion of recent studies using stock market data to estimate the impact of unions on firms is that strikes have reduced the share value of struck firms.One question not yet answered, however, is whether strikes redistribute wealth within an industry.If one firm is selected for a strike while competing rivals remain in operation, the rivals may receive higher output prices and increase production.Thus, an effec-