Vertical Differentiation, Wage Bargaining and Intra-Industry Trade Liberalization

CORE Discussion Paper No. 2004/28

25 Pages Posted: 31 Mar 2007

See all articles by Emanuele Bacchiega

Emanuele Bacchiega

University of Bologna - Department of Economics

Date Written: May 2004

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.

Keywords: vertical differentiation, workers' skills, wage bargaining, trade liberalization, industry asymmetries

JEL Classification: L11, J00, F14

Suggested Citation

Bacchiega, Emanuele, Vertical Differentiation, Wage Bargaining and Intra-Industry Trade Liberalization (May 2004). Available at SSRN: https://ssrn.com/abstract=975899 or http://dx.doi.org/10.2139/ssrn.975899

Emanuele Bacchiega (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
40126 Bologna, 40125
Italy
+390512098486 (Phone)
+390512098493 (Fax)

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