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Unionized Bertrand Duopoly and Strategic Export Policy

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  • Bandyopadhyay, Subhayu
  • Bandyopadhyay, Sudeshna C
  • Park, Eun-Soo

Abstract

The paper reports that an export subsidy is optimal for a unionized Bertrand duopoly. Following results published by Brander and Spencer (1988), this establishes the robustness of export subsidization to the mode of competition (Cournot or Bertrand), and contrasts with nonunion results in the literature. If both firms are unionized and both governments pursue active trade policies, a subsidy remains optimal except for a narrow range of extreme substitutability between products. Nations with a lower opportunity cost of labor employ more aggressive policies in equilibrium. Copyright 2000 by Blackwell Publishing Ltd.

Suggested Citation

  • Bandyopadhyay, Subhayu & Bandyopadhyay, Sudeshna C & Park, Eun-Soo, 2000. "Unionized Bertrand Duopoly and Strategic Export Policy," Review of International Economics, Wiley Blackwell, vol. 8(1), pages 164-174, February.
  • Handle: RePEc:bla:reviec:v:8:y:2000:i:1:p:164-74
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    Cited by:

    1. Nicole Gürtzgen, 2002. "Trade Liberalization and Union Wages in a Differentiated Bertrand Duopoly," Open Economies Review, Springer, vol. 13(2), pages 133-151, April.
    2. Ghosh, Arghya & Saha, Souresh, 2015. "Price competition, technology licensing and strategic trade policy," Economic Modelling, Elsevier, vol. 46(C), pages 91-99.
    3. Manitra Rakotoarisoa, 2011. "Strategic Trade Policies Under Monopsony and Uncertainty: The Exporter’s Non-Linear Responses Based on the Organization of Its Industry," Journal of Industry, Competition and Trade, Springer, vol. 11(2), pages 187-201, June.
    4. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.
    5. Yu-ter Wang, 2008. "Product Differentiation: An Alternative To Cvds," South African Journal of Economics, Economic Society of South Africa, vol. 76(3), pages 513-517, September.
    6. Wen-Jung Liang & Chao-Cheng Mai, 2010. "Optimal Trade Policy with Horizontal Differentiation and Asymmetric Costs," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 302-310, May.
    7. Takauchi, Kazuhiro, 2015. "Strategic export policy, monopoly carrier, and product differentiation," MPRA Paper 66003, University Library of Munich, Germany.

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