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Unionization and Strategic Trade Policy

18 Pages Posted: 29 Jan 2006  

Phillip Swagel

Northwestern University - Department of Economics; International Monetary Fund (IMF)

Ling Hui Tan

International Monetary Fund (IMF) - European Department

Date Written: March 2000

Abstract

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.

Keywords: strategic trade policy, trade union, wage bargaining

JEL Classification: F13, J51

Suggested Citation

Swagel, Phillip and Tan, Ling Hui, Unionization and Strategic Trade Policy (March 2000). IMF Working Paper, Vol. , pp. 1-18, 2000. Available at SSRN: https://ssrn.com/abstract=879458

Phillip Swagel (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
IMF Room 10-612F
Washington, DC 20431
United States
(202) 623-7301 (Phone)
(202) 623-6343 (Fax)

Northwestern University - Department of Economics ( email )

2003 Sheridan Road
Evanston, IL 60208
United States
(847) 491-8219 (Phone)

Ling Hui Tan

International Monetary Fund (IMF) - European Department ( email )

700 19th St. NW
Washington, DC 20431
United States

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