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Efficient bargaining, welfare and strategic export policy

Subhayu Bandyopadhyay () and Sudeshna Bandyopadhyay

The Journal of International Trade & Economic Development, 2001, vol. 10, issue 2, 133-149

Abstract: We present an efficient bargaining model and analyse the welfare effects of unionization, where rival exporting governments employ strategic export policy. The domestic firm is unionized and conducts a Nash bargain with its union to determine wage and employment. The union may be wage oriented, wage neutral or employment oriented. The foreign firm is non-unionized. Stability of the reaction function equilibrium in policy space is sufficient for the following results: (i) domestic welfare increases with the degree of wage orientation; (ii) an increase in the union's bargaining power leads to higher (lower) domestic welfare if the union is wage (employment) oriented; (iii) if the domestic social marginal cost of labour is less than or equal to the foreign marginal cost, domestic market share is higher under wage orientation.

Keywords: Unionized Oligopoly; Wage Orientation And Employment Orientation; Union Bargaining Power; Stability In Policy Space (search for similar items in EconPapers)
Date: 2001
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Handle: RePEc:taf:jitecd:v:10:y:2001:i:2:p:133-149