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Competitiveness and Integration of Product Markets

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  • Jakob Munch
  • Jan Sørensen

Abstract

This article develops a two-country, two-sector model with imperfect competition in one sector and asymmetric labor market structures in the sense that trade unions have wage bargaining power in one country whereas the labor market is competitive in the other country. We use a new approach to model product market integration, and it turns out that the unionized country gains from integration in terms of welfare, and, if the initial level of integration is relatively low, experiences an increase in employment and investment. Copyright Kluwer Academic Publishers 2000

Suggested Citation

  • Jakob Munch & Jan Sørensen, 2000. "Competitiveness and Integration of Product Markets," Open Economies Review, Springer, vol. 11(4), pages 359-381, October.
    • Handle: RePEc:kap:openec:v:11:y:2000:i:4:p:359-381
    DOI: 10.1023/A:1008374426687
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    References listed on IDEAS

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    1. Mezzetti, Claudio & Dinopoulos, Elias, 1991. "Domestic unionization and import competition," Journal of International Economics, Elsevier, vol. 31(1-2), pages 79-100, August.
    2. Jan Sørensen, 1994. "Market integration and imperfect competition in labor and product markets," Open Economies Review, Springer, vol. 5(1), pages 115-130, March.
    3. Brander, James A. & Spencer, Barbara J., 1988. "Unionized oligopoly and international trade policy," Journal of International Economics, Elsevier, vol. 24(3-4), pages 217-234, May.
    4. Danthine, Jean-Pierre & Hunt, Jennifer, 1994. "Wage Bargaining Structure, Employment and Economic Integration," Economic Journal, Royal Economic Society, vol. 104(424), pages 528-541, May.
    5. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-125, January.
    6. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-193.
    7. Driffill, John & van der Ploeg, Frederick, 1993. "Monopoly Unions and the Liberalisation of International Trade," Economic Journal, Royal Economic Society, vol. 103(417), pages 379-385, March.
    8. Huizinga, Harry, 1993. " International Market Integration and Union Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(2), pages 249-255.
    9. Jan Rose SØRENSEN, 1993. "Integration of Product Markets when Labour Markets are Unionized," Discussion Papers (REL - Recherches Economiques de Louvain) 1993044, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    10. Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, vol. 42(7), pages 1251-1267, July.
    11. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
    12. Driffill, John & van der Ploeg, Frederick, 1995. " Trade Liberalization with Imperfect Competition in Goods and Labour Markets," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(2), pages 223-243, June.
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    Cited by:

    1. Ana MAULEON & Vincent J. VANNETELBOSCH, 2001. "Product Market Integration, Wage Bargaining and Strike Activity," LIDAM Discussion Papers IRES 2001022, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    2. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Instituto de Investigaciones Económicas, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.

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