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Strategic trade and FDI policies in a unionized industry

Author

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  • Buccella Domenico

    (Department of Economics, Kozminski University, Jagiellońska Street, 57/59, 03-301 Warszawa, Poland)

Abstract

This paper analyzes the differences between strategic trade and the competitionm policies (in the form of inward Foreign Direct Investment) to regulate a unionized monopoly in the domestic country. With decentralized negotiations both policies reduce labour and product market distortions. However the fixed cost for the foreign entrant and the degree of product differentiation determine which policy should be implemented to maximize national welfare, and the cases in which the domestic government can intervene, to achieve a Pareto-improvement.

Suggested Citation

  • Buccella Domenico, 2019. "Strategic trade and FDI policies in a unionized industry," Economics and Business Review, Sciendo, vol. 5(1), pages 12-31, March.
    • Handle: RePEc:vrs:ecobur:v:5:y:2019:i:1:p:12-31:n:2
    DOI: 10.18559/ebr.2019.1.2
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    References listed on IDEAS

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    More about this item

    Keywords

    strategic trade policy; FDI policy; unionized markets;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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