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Trade Liberalization and Union Wages in a Differentiated Bertrand Duopoly

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Author Info
Nicole Gürtzgen ()
Abstract

In a framework of a unionized international Bertrand duopoly with differentiated products, this article analyzes national labor market interdependencies and the consequences of trade liberalization for union wages. The analysis suggests that national wages are likely to be strategic complements (substitutes) if products are ordinary substitutes (complements). Under the assumption of linear demand, it is shown that bilateral trade liberalization always leads to higher union set wages and union utilities, regardless of the nature of product rivalry. An analysis of the consequences of unilateral tariff reductions shows that foreign tariff reductions always give rise to higher union wages and utilities, whereas the impact of unilateral domestic tariff reductions depends on the nature of product rivalry. Copyright Kluwer Academic Publishers 2002

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Article provided by Springer in its journal Open Economies Review.

Volume (Year): 13 (2002)
Issue (Month): 2 (April)
Pages: 133-151
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Handle: RePEc:kap:openec:v:13:y:2002:i:2:p:133-151

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Keywords: trade unions oligopoly intraindustry trade product market integration

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James A. Brander & Paul Krugman, 1983. "A 'Reciprocal Dumping' Model of International Trade," NBER Working Papers 1194, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  2. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 488-511, June. [Downloadable!] (restricted)
  3. T. Fisher & D. Wright, 1999. "Unionized Oligopoly and Trade Liberalization," Canadian Journal of Economics, Canadian Economics Association, vol. 32(3), pages 799-816, May. [Downloadable!] (restricted)
  4. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter. [Downloadable!] (restricted)
  5. Huizinga, Harry, 1993. " International Market Integration and Union Wage Bargaining," Scandinavian Journal of Economics, Blackwell Publishing, vol. 95(2), pages 249-55.
  6. Brander, James A. & Spencer, Barbara J., 1985. "Export subsidies and international market share rivalry," Journal of International Economics, Elsevier, vol. 18(1-2), pages 83-100, February. [Downloadable!] (restricted)
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  7. A. Jorge Padilla & Samuel Bentolila & Juan J. Dolado, 1996. "Wage Bargaining in Industries with Market Power," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 5(4), pages 535-564, December. [Downloadable!] (restricted)
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  8. Gaston, Noel & Trefler, Daniel, 1995. "Union wage sensitivity to trade and protection: Theory and evidence," Journal of International Economics, Elsevier, vol. 39(1-2), pages 1-25, August. [Downloadable!] (restricted)
  9. Corneo, Giacomo, 1995. "National wage bargaining in an internationally integrated product market," European Journal of Political Economy, Elsevier, vol. 11(3), pages 503-520, September. [Downloadable!] (restricted)
  10. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Blackwell Publishing, vol. 87(2), pages 160-93.
  11. Brander, James A. & Spencer, Barbara J., 1988. "Unionized oligopoly and international trade policy," Journal of International Economics, Elsevier, vol. 24(3-4), pages 217-234, May. [Downloadable!] (restricted)
  12. A. Jorge Padilla & Samuel Bentolila & Juan J. Dolado, 1996. "Wage Bargaining in Industries with Market Power," Banco de España Working Papers 9616, Banco de España.
  13. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July. [Downloadable!] (restricted)
  14. Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, vol. 42(7), pages 1251-1267, July. [Downloadable!] (restricted)
  15. Mezzetti, Claudio & Dinopoulos, Elias, 1991. "Domestic unionization and import competition," Journal of International Economics, Elsevier, vol. 31(1-2), pages 79-100, August. [Downloadable!] (restricted)
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  16. Bandyopadhyay, Subhayu & Bandyopadhyay, Sudeshna C & Park, Eun-Soo, 2000. "Unionized Bertrand Duopoly and Strategic Export Policy," Review of International Economics, Blackwell Publishing, vol. 8(1), pages 164-74, February. [Downloadable!] (restricted)
  17. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December. [Downloadable!] (restricted)
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  1. Lommerud, Kjell Erik & Meland, Frode & Straume, Odd Rune, 2005. "Globalization and Union Opposition to Technological Change," CEPR Discussion Papers 4836, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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