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Vertical differentiation, wage bargaining and intra-industry trade liberalization

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  • BACCHIEGA, Emanuele

Abstract

This article analyzes the effects of trade liberalization between two asymmetric industries. Asymmetries concern consuemers' masses and labor endowments. The latter, together with human capital specificity in the production of the variants of a vertically differentiated good, determine market form and the range of products available in each industry. We show that market integration benefits or harms the agents in the industries following on industry-specific parameters. As the conditions on gains and losses from trade are independent between countries, bilateral losses from trade can emerge at equilibrium.

Suggested Citation

  • BACCHIEGA, Emanuele, 2004. "Vertical differentiation, wage bargaining and intra-industry trade liberalization," CORE Discussion Papers 2004028, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvco:2004028
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    File URL: https://uclouvain.be/en/research-institutes/immaq/core/dp-2004.html
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    References listed on IDEAS

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    More about this item

    Keywords

    vertical differentiation; workers’ skills; wage bargaining; trade liberalization; industry asymmetries;

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • J00 - Labor and Demographic Economics - - General - - - General
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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