Unionized Bertrand Duopoly and Strategic Export Policy

Posted: 10 Aug 2000

See all articles by Subhayu Bandyopadhyay

Subhayu Bandyopadhyay

Federal Reserve Bank of St. Louis - Research Division; IZA Institute of Labor Economics; West Virginia University

Sudeshna Champati Bandyopadhyay

West Virginia University

Eun-Soo Park

Northwestern University - Department of Economics

Abstract

The paper reports that an export subsidy is optimal for a unionized Bertrand duopoly. Following results published by Brander and Spencer (Journal of International Economics, 1988, pp. 217-34), this establishes the robustness of export subsidization to the mode of competition (Cournot or Bertrand), and contrasts with nonunion results in the literature. If both firms are unionized and both governments pursue active trade policies, a subsidy remains optimal except for a narrow range of extreme substitutability between products. Nations with a lower opportunity cost of labor employ more aggressive policies in equilibrium.

JEL Classification: F12, F13, F14

Suggested Citation

Bandyopadhyay, Subhayu and Bandyopadhyay, Sudeshna Champati and Park, Eun-Soo, Unionized Bertrand Duopoly and Strategic Export Policy. The Review of International Economics, Vol. 8, Issue 1, February 2000. Available at SSRN: https://ssrn.com/abstract=234903

Subhayu Bandyopadhyay (Contact Author)

Federal Reserve Bank of St. Louis - Research Division ( email )

411 Locust St
PO Box 442
St. Louis, MO 63011
United States

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

West Virginia University ( email )

Morgantown, WV 26506-6025
United States
304-293-7879 (Phone)
304-293-7061 (Fax)

Sudeshna Champati Bandyopadhyay

West Virginia University ( email )

Morgantown, WV 26506-6025
United States

Eun-Soo Park

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States

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