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Trade Liberalization with Imperfect Competition in Goods and Labour Markets

  • Driffill, John
  • van der Ploeg, Frederick

The effects of removing tariffs and trade barriers on the behavior of utilitarian monopoly trade unions are considered. A model of intraindustry trade in differentiated commodities under monopolistic competition and increasing returns to scale is used. National and international trade unions are distinguished. Removal of trade barriers reduces monopoly power in labor markets. This forces wages down and increases employment and the number of firms in the differentiated goods industry. The removal of trade barriers appears to strongly increase the incentive for national unions to cooperate internationally. Such cooperation would undermine the benefits of trade liberalization for nonmembers of the unions. Copyright 1995 by The editors of the Scandinavian Journal of Economics.

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Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 97 (1995)
Issue (Month): 2 (June)
Pages: 223-43

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Handle: RePEc:bla:scandj:v:97:y:1995:i:2:p:223-43
Contact details of provider: Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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