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Trade Liberalization and Labor Unions

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  • Toru Kikuchi
  • J. Amegashie

Abstract

The present note builds a two-country model of Cournot oligopoly with country-specific labor unions. The impact of trade liberalization on wages and its consequent impact on union behavior and trade patterns are examined. We show that the union with relatively fewer number of firms will face the stronger pressure for wage moderation when trade is liberalized. We use this result to construct a simple example in which a country with higher autarky price becomes a net exporter of that good. We also discuss that our results are critically dependent on the mode of competition between firms. Copyright Kluwer Academic Publishers 2003

Suggested Citation

  • Toru Kikuchi & J. Amegashie, 2003. "Trade Liberalization and Labor Unions," Open Economies Review, Springer, vol. 14(1), pages 5-9, January.
    • Handle: RePEc:kap:openec:v:14:y:2003:i:1:p:5-9
    DOI: 10.1023/A:1021204614476
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    References listed on IDEAS

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    1. Booth,Alison L., 1994. "The Economics of the Trade Union," Cambridge Books, Cambridge University Press, number 9780521468398, January.
    2. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
    3. Huizinga, Harry, 1993. " International Market Integration and Union Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(2), pages 249-255.
    4. 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.
    5. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
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    Cited by:

    1. Marianna Belloc, 2009. "International Specialization and Labor Unions: Evidence from OECD Countries," Review of International Economics, Wiley Blackwell, vol. 17(1), pages 34-50, February.
    2. Persyn, Damiaan, 2013. "Union wage demands with footloose firms and agglomeration forces," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 142-150.
    3. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.

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