Unionized monopoly regulation: strategic trade vs. domestic competition policies
This note analyzes the differences between strategic trade and domestic competition policies to regulate a unionized monopoly. In the presence of an industry-wide union, the entry of a domestic competitor does not reduce labor market distortions, while strategic trade policy reduces both labor and product markets distortions. The fixed cost for the domestic entrant and the foreign union sensitivity to employment determine which policy should be implemented to maximize national welfare.
Volume (Year): 32 (2012)
Issue (Month): 1 ()
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