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The endogenous decisions of unionization and international trade: A general oligopolistic equilibrium model analysis

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  • Hosaki Sano

    (Graduate School of Economics, Osaka University)

Abstract

This paper presents a multi-sector general oligopolistic equilibrium trade model in which unionized and non-unionized sectors interact. In our model, the proportion of unionized sectors to all sectors is endogenously determined. We show that the proportion of unionized sectors depends on exogenous parameters such as productivity, population, the number of firms, union costs, and globalization. The increase in population raises the proportion of unionized sectors and lowers the competitive wage, whereas the increase in the number of firms and in the union cost lowers the proportion of unionized sectors and raises the competitive wage. We also show that trade openness between symmetric countries raises the competitive wage and lowers the proportion of unionized sectors, whereas the effect on welfare is ambiguous.

Suggested Citation

  • Hosaki Sano, 2018. "The endogenous decisions of unionization and international trade: A general oligopolistic equilibrium model analysis," Discussion Papers in Economics and Business 18-14, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1814
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    References listed on IDEAS

    as
    1. J. Peter Neary, 2016. "International Trade in General Oligopolistic Equilibrium," Review of International Economics, Wiley Blackwell, vol. 24(4), pages 669-698, September.
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    6. Udo Kreickemeier & Frode Meland, 2017. "Non-Traded Goods, Globalization, and Union Influence," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 7, pages 173-201, World Scientific Publishing Co. Pte. Ltd..
    7. 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.
    8. Hartmut Egger & Daniel Etzel, 2012. "Union Wage Setting and International Trade," IAAEU Discussion Papers 201209, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
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    10. Paulo Bastos & Udo Kreickemeier, 2017. "Unions, Competition, and International Trade in General Equilibrium," World Scientific Book Chapters, in: International Trade and Labor Markets Welfare, Inequality and Unemployment, chapter 6, pages 143-172, World Scientific Publishing Co. Pte. Ltd..
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    More about this item

    Keywords

    labor union; international trade; general oligopolistic equilibrium;
    All these keywords.

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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