Unionization and International Market Share Rivalry: A Paradox

Subhayu Bandyopadhyay and Sudeshna Champati Bandyopadhyay

Review of International Economics, 1999, vol. 7, issue 1, 153-61

Abstract: Two exporting firms (domestic and foreign) are considered which are symmetric in all respects except that one is unionized while the other faces a competitive labor market. Under free trade the unionized firm has the lower market share. Paradoxically, in the policy equilibrium, the unionized firm has the larger market share. Consequently, the nation hosting the unionized firm has the higher welfare level. Copyright 1999 by Blackwell Publishing Ltd.

Date: 1999
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