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Resistance to Trade Liberalization in Unionized Sector

  • Koichi Kagitani


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    This paper studies the lobbying against trade liberalization by both a firm and a union in the same industry. We find that the relationship between their political activities depends on the effect of political activity by one on the marginal effectiveness of political activity by the other. We also show that, when they are strongly risk-averse and their political activities are strategic complements, trade liberalization is likely to be successful if business is brisk, the foreign firm's production cost is high or the number of union members is small. However, when they are not strongly risk-averse, these results hold reversely. Copyright Kluwer Academic Publishers 2003

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    Article provided by Springer in its journal Open Economies Review.

    Volume (Year): 14 (2003)
    Issue (Month): 4 (October)
    Pages: 419-435

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    Handle: RePEc:kap:openec:v:14:y:2003:i:4:p:419-435
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    1. Hillman, Arye L, 1982. "Declining Industries and Political-Support Protectionist Motives," American Economic Review, American Economic Association, vol. 72(5), pages 1180-87, December.
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    3. Mezzetti, C. & Dinopoulos, E., 1989. "Domestic Unionization And Import Competition," Papers 337, California Davis - Institute of Governmental Affairs.
    4. Pecorino, Paul, 1998. "Is There a Free-Rider Problem in Lobbying? Endogenous Tariffs, Trigger Strategies, and the Number of Firms," American Economic Review, American Economic Association, vol. 88(3), pages 652-60, June.
    5. Kar-yiu Wong, 1989. "Optimal Threat Of Trade Restriction And Quid Pro Quo Foreign Investment," Economics and Politics, Wiley Blackwell, vol. 1(3), pages 277-300, November.
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    8. Vousden,Neil, 1990. "The Economics of Trade Protection," Cambridge Books, Cambridge University Press, number 9780521346696, November.
    9. James W. Friedman, 1971. "A Non-cooperative Equilibrium for Supergames," Review of Economic Studies, Oxford University Press, vol. 38(1), pages 1-12.
    10. Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, vol. 18(2), pages 155-162, April.
    11. 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.
    12. Mayer, Wolfgang, 1984. "Endogenous Tariff Formation," American Economic Review, American Economic Association, vol. 74(5), pages 970-85, December.
    13. Ronald Findlay & Stanislaw Wellisz, 1982. "Endogenous Tariffs, the Political Economy of Trade Restrictions, and Welfare," NBER Chapters, in: Import Competition and Response, pages 223-244 National Bureau of Economic Research, Inc.
    14. Elias Dinopoulos, 1992. "Quid Pro Quo Foreign Investment And Vers: A Nash Bargaining Approach," Economics and Politics, Wiley Blackwell, vol. 4(1), pages 43-60, 03.
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