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Oligopoly, open shop unions and trade liberalisation

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  • Paulo Bastos
  • Udo Kreickemeier
  • Peter Wright

Abstract

In an international oligopoly model, we investigate how trade liberalisation impacts on collective bargaining outcomes when workers are represented by open shop unions. We find that, with intermediate levels of union density, trade liberalisation may lead to higher negotiated wages even if no trade occurs in equilibrium. In addition, we show that union wages may be higher with free trade than in autarky.

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Paper provided by University of Nottingham, GEP in its series Discussion Papers with number 07/30.

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Handle: RePEc:not:notgep:07/30

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Keywords: International oligopoly; bargaining; open shop unions; trade liberalisation;

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References

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  1. Barth, Erling & Raaum, Oddbjorn & Naylor, Robin, 2000. "Union Wage Effects: Does Membership Matter?," Manchester School, University of Manchester, University of Manchester, vol. 68(3), pages 259-75, June.
  2. Huizinga, H.P., 1993. "International market integration and union wage bargaining," Open Access publications from Tilburg University, Tilburg University urn:nbn:nl:ui:12-155144, Tilburg University.
  3. Brander, James A., 1981. "Intra-industry trade in identical commodities," Journal of International Economics, Elsevier, Elsevier, vol. 11(1), pages 1-14, February.
  4. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 109(452), pages 102-25, January.
  5. Gunderson, Morley & Melino, Angelo, 1987. "Estimating Strike Effects in a General Model of Prices and Quantities," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 5(1), pages 1-19, January.
  6. Mezzetti, C. & Dinopoulos, E., 1989. "Domestic Unionization And Import Competition," Papers, California Davis - Institute of Governmental Affairs 337, California Davis - Institute of Governmental Affairs.
  7. Naylor, Robin & Raaum, Oddbjorn, 1993. "The Open Shop Union, Wages, and Management Opposition," Oxford Economic Papers, Oxford University Press, Oxford University Press, vol. 45(4), pages 589-604, October.
  8. Lommerud, Kjell Erik & Meland, Frode & Rune Straume, Odd, 2006. "Globalisation and union opposition to technological change," Journal of International Economics, Elsevier, Elsevier, vol. 68(1), pages 1-23, January.
  9. Munch, Jakob Roland & Skaksen, Jan Rose, 2002. " Product Market Integration and Wages in Unionized Countries," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 104(2), pages 289-99, June.
  10. Kjell Erik Lommerud & Frode Meland & Lars Sørgard, 2002. "Unionized Oligopoly, Trade Liberalization and Location Choice," CESifo Working Paper Series, CESifo Group Munich 777, CESifo Group Munich.
  11. Corneo, Giacomo, 1995. "Social custom, management opposition, and trade union membership," European Economic Review, Elsevier, Elsevier, vol. 39(2), pages 275-292, February.
  12. Naylor, Robin & Cripps, Martin, 1993. "An economic theory of the open shop trade union," European Economic Review, Elsevier, Elsevier, vol. 37(8), pages 1599-1620, December.
  13. repec:ese:iserwp:2001-09 is not listed on IDEAS
  14. Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, Elsevier, vol. 42(7), pages 1251-1267, July.
  15. Cynthia L. Gramm & John F. Schnell, 1994. "Some Empirical Effects Of Using Permanent Striker Replacements," Contemporary Economic Policy, Western Economic Association International, Western Economic Association International, vol. 12(3), pages 122-133, 07.
  16. Brander, James A. & Spencer, Barbara J., 1988. "Unionized oligopoly and international trade policy," Journal of International Economics, Elsevier, Elsevier, vol. 24(3-4), pages 217-234, May.
  17. Booth, Alison L & Bryan, Mark L, 2001. "The Union Membership Wage Premium Puzzle: Is There A Free-Rider Problem?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2879, C.E.P.R. Discussion Papers.
  18. Straume, Odd Rune, 2003. "International mergers and trade liberalisation: implications for unionised labour," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 21(5), pages 717-735, May.
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Citations

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Cited by:
  1. Paulo Bastos & Odd Rune Straume, 2010. "Globalization, product differentiation and wage inequality," NIPE Working Papers, NIPE - Universidade do Minho 8/2010, NIPE - Universidade do Minho.
  2. Udo Kreickemeier & Frode Meland, . "International Trade, Union Wage Premia, and Welfare in General Equilibrium," Discussion Papers, University of Nottingham, GEP 11/05, University of Nottingham, GEP.
  3. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.
  4. Maiti, Dibyendu & Mukherjee, Arijit, 2013. "Trade cost reduction, subcontracting and unionised wage," Labour Economics, Elsevier, Elsevier, vol. 21(C), pages 103-110.

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