Over the past two decades, there has been an extraordinary expansion of the economic theory of the trade union. There has also emerged a huge literature that describes and quantifies the impact of the trade union on a host of labour market outcomes. The purpose of this book is to impose some structure on this literature, in order to make it easily accessible to the student of the economics of the trade union or the economics of industrial relations. The models in the book refer to collective agreements between a labour union and management. However, these models are also relevant to a much wider class of situations than those in which a trade union explicitly represents workers. Indeed, union collective bargaining agreements may be viewed simply as an explicit formulation of a wider variety of labour contracts that are found in labour markets wherever workers have some degree of bargaining power.

Work on this book was begun in late 1989, when it became clear that, following the expansion in the theoretical and applied literature on the economics of the trade union over the preceding decade, there was a gap in the labour economics literature that might usefully be filled. For teaching purposes in particular, there appeared to be a dearth of material suitable for third year undergraduates in the British system.