International Oligopoly and Asymmetric Labour Market Institutions

James A. Brander and Barbara Spencer ()

No 2038, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Asymmetries in labour relations can have important effects on imperfectively competitive rivalries between firms. Such asymmetries are particularly striking in cross-country comparisons and are therefore of greatest interest in international markets. Using a simple duopoly model, we focus on two asymmetries. First, one firm may face a noncooperative union and second, institutional factors may allow one firm to commit itself to particular labour input before its rival sets output, giving it a natural Stackelberg leadership role. We examine the trade policy incentives resulting from these labour asymmetries, focusing on profit shifting tariffs, quotas and subsidies.

Date: 1986-10
Note: ITI IFM
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