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Union Wage Strategies and International Trade

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  • Naylor, Robin

Abstract

The author characterizes a full set of possible international trade regimes for different combinations of wages in a two-country model of oligopoly with a homogeneous product. He shows that the nature of any equilibrium trade will be either interindustry (one-way) or intraindustry (two-way) depending on (endogenous) union choices between high- and low-wage strategies. The author shows that intraindustry trade is the more likely the lower are trade costs and that, under intraindustry trade, falling trade costs lead monopoly unions to set higher wages, but the opposite obtains under interindustry trade.

Suggested Citation

  • Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-125, January.
  • Handle: RePEc:ecj:econjl:v:109:y:1999:i:452:p:102-25
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    References listed on IDEAS

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    1. Ricci, Luca Antonio, 1995. "Exchange rate regimes and location," Discussion Papers, Series II 291, University of Konstanz, Collaborative Research Centre (SFB) 178 "Internationalization of the Economy".
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    12. De Grauwe, Paul & Vanhaverbeke, Wim, 1991. "Is Europe an Optimum Currency Area? Evidence from Regional Data," CEPR Discussion Papers 555, C.E.P.R. Discussion Papers.
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    More about this item

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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