Unionization and Strategic Trade Policy

Author/Editor:

Phillip L Swagel ; Ling H Tan

Publication Date:

March 1, 2000

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper examines the effect of unionization on welfare and trade policy in a model of duopolists competing in a third market. It shows that the traditional result that the presence of a union necessitates a stronger strategic trade policy to reach the optimal level of welfare depends on the mode of competition. With Bertrand duopolists, a union can be welfare-improving; it can also lead to a weaker trade policy, or even reverse the direction of the optimal policy. The results highlight the importance for trade policy of understanding the nature of firm behavior and the institutional features of the labor market.

Series:

Working Paper No. 2000/053

Subject:

Export subsidies Labor Trade policy Wage setting Wages

English

Publication Date:

March 1, 2000

ISBN/ISSN:

9781451847376/1018-5941

Stock No:

WPIEA0532000

Pages:

17

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