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Union Cooperation and Nontraded Goods in General Equilibrium


  • Rasmussen, Bo Sandemann


A general equilibrium model of a small open economy with traded and nontraded goods and sector-specific trade unions is set up. Wage formation is either noncooperative or cooperative. Egalitarian union wage policy is shown to be the equilibrium under cooperation. Important asymmetries are encountered and an alternative model of cooperative behavior called bargaining cooperation is proposed. Bargaining cooperation is shown to have qualitatively different implications than simple cooperation. The welfare and employment effects of bargaining cooperation compared to simple cooperation are ambiguous. Copyright 1992 by The editors of the Scandinavian Journal of Economics.

Suggested Citation

  • Rasmussen, Bo Sandemann, 1992. " Union Cooperation and Nontraded Goods in General Equilibrium," Scandinavian Journal of Economics, Wiley Blackwell, vol. 94(4), pages 561-579.
  • Handle: RePEc:bla:scandj:v:94:y:1992:i:4:p:561-79

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    References listed on IDEAS

    1. Yeon-Koo Che & Jozsef Sakovics, 2004. "Contractual Remedies to the Holdup Problem: A Dynamic Perspective," ESE Discussion Papers 100, Edinburgh School of Economics, University of Edinburgh.
    2. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, June.
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    Cited by:

    1. Bo Rasmussen, 1999. "On the Scope for International Tax Cooperation: The Role of Capital Controls," Open Economies Review, Springer, vol. 10(4), pages 395-414, October.
    2. Steinar Holden, 2003. "Wage-setting under Different Monetary Regimes," Economica, London School of Economics and Political Science, vol. 70(278), pages 251-265, May.
    3. Udo Kreickemeier & Frode Meland, "undated". "International Trade, Union Wage Premia, and Welfare in General Equilibrium," Discussion Papers 11/05, University of Nottingham, GEP.
    4. Sebastian Weber, 2006. "Labor Market Structures, Trade and their Effect on Unemployment: A Theoretical Analysis and Empirical Investigation," IHEID Working Papers 22-2006, Economics Section, The Graduate Institute of International Studies.

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