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Trade and Competition Policies in Imperfectly Competitive Markets

Author

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  • Domenico Buccella

Abstract

This work analyzes the difference between trade policy and competition policy for prices, wages, employment and national welfare when both product and labor markets are imperfectly competitive. Trade and competition policies have different impact on the domestic labor market when it is unionized. While competitive policies increase union welfare, imports from a foreign country reduce it. Competition policy in the presence of national labor unions does not reduce labor market distortions, while competition induced by trade policy from a foreign exporter reduces both labor and product market distortions and competition is harsher as long as a foreign union is more employment oriented. The impact of both policies on the domestic welfare level is analyzed.

Suggested Citation

  • Domenico Buccella, 2008. "Trade and Competition Policies in Imperfectly Competitive Markets," FIW Working Paper series 016, FIW.
  • Handle: RePEc:wsr:wpaper:y:2008:i:016
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    Keywords

    Trade and competition policies; monopoly; labor unions;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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