Economics at your fingertips  

Product market integration and wage bargaining institutions

Michele Santoni ()

Labour Economics, 2014, vol. 27, issue C, 1-15

Abstract: This paper studies the effects of product market integration on wage bargaining institutions. By considering an international Cournot–Nash oligopoly with unionised home firms and non-unionised foreign firms producing substitute goods, the paper shows that the relative size of the home and foreign markets matters for the effects of a bilateral reduction in trade barriers. If the home market size is relatively larger than the foreign market size, a reduction in trade barriers, by lowering the sharable surplus for home firms and unions in the global market, gives unions incentives to choose more decentralised wage bargaining institutions. This industry-level mechanism, however, works in the opposite direction when the foreign market size is sufficiently large, including the “reciprocal dumping” symmetric market size model. In this case, cutting trade barriers raises the global sharable surplus and encourages domestic wage-setters to choose more centralised institutions.

Keywords: Endogenous wage bargaining institutions; Unionised oligopolies; Trade integration (search for similar items in EconPapers)
JEL-codes: F1 J51 L13 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

DOI: 10.1016/j.labeco.2013.12.004

Access Statistics for this article

Labour Economics is currently edited by A. Ichino

More articles in Labour Economics from Elsevier
Bibliographic data for series maintained by Haili He ().

Page updated 2020-08-02
Handle: RePEc:eee:labeco:v:27:y:2014:i:c:p:1-15