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Efficient bargaining, welfare and strategic export policy

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  • Subhayu Bandyopadhyay
  • Sudeshna Bandyopadhyay

Abstract

We present an efficient bargaining model and analyse the welfare effects of unionization, where rival exporting governments employ strategic export policy. The domestic firm is unionized and conducts a Nash bargain with its union to determine wage and employment. The union may be wage oriented, wage neutral or employment oriented. The foreign firm is non-unionized. Stability of the reaction function equilibrium in policy space is sufficient for the following results: (i) domestic welfare increases with the degree of wage orientation; (ii) an increase in the union's bargaining power leads to higher (lower) domestic welfare if the union is wage (employment) oriented; (iii) if the domestic social marginal cost of labour is less than or equal to the foreign marginal cost, domestic market share is higher under wage orientation.

Suggested Citation

  • Subhayu Bandyopadhyay & Sudeshna Bandyopadhyay, 2001. "Efficient bargaining, welfare and strategic export policy," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 10(2), pages 133-149.
  • Handle: RePEc:taf:jitecd:v:10:y:2001:i:2:p:133-149
    DOI: 10.1080/09638190110039028
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    References listed on IDEAS

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    Cited by:

    1. Domenico Buccella & Luciano Fanti, 2017. "A game-theoretic approach to the choice of union-oligopoly baargaining agenda," Discussion Papers 2017/214, Dipartimento di Economia e Management (DEM), University of Pisa, Pisa, Italy.
    2. repec:ebl:ecbull:v:6:y:2008:i:38:p:1-8 is not listed on IDEAS
    3. Leonard F. S. Wang & Wei Zhao & Ya -Chin Wang, 2008. "Strategic Trade Policy in Bargaining over Managerial Delegation Competition," Economics Bulletin, AccessEcon, vol. 6(38), pages 1-8.
    4. Fanti, Luciano & Buccella, Domenico, 2016. "Passive unilateral cross-ownership and strategic trade policy," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 10, pages 1-22.
    5. Kazuhiro Ohnishi, 2006. "A Mixed Duopoly with a Lifetime Employment Contract as a Strategic Commitment," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 62(1), pages 108-123, March.
    6. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.

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