Unions, competition and international trade in general equilibrium

Paulo Bastos and Udo Kreickemeier

Journal of International Economics, 2009, vol. 79, issue 2, 238-247

Abstract: We develop a two-country, multi-sector model of oligopoly in which unionised and non-unionised sectors interact in general equilibrium. The model is used to study the impact of trade liberalisation, deunionisation and firm entry on wages in unionised and non-unionised sectors, and on welfare. We find that a shift from autarky to free trade increases non-union wages and welfare, whereas the effect on union wages is ambiguous. We also show that partial deunionisation leads to higher wages in both unionised and non-unionised sectors, but only increases welfare when the proportion of unionised sectors is sufficiently low. Finally, wages in non-unionised sectors necessarily increase with firm entry, while the response of union wages and welfare depends on the trade regime.

Keywords: Trade; unions; Product; market; competition; General; oligopolistic; equilibrium; Trade; liberalisation (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (84)

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Working Paper: Unions, Competition and International Trade in General Equilibrium (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:79:y:2009:i:2:p:238-247

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