Vertical differentiation, wage bargaining and intra-industry trade liberalization

Emanuele Bacchiega

No 2004028, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This article analyzes the effects of trade liberalization between two asymmetric industries. Asymmetries concern consuemers' masses and labor endowments. The latter, together with human capital specificity in the production of the variants of a vertically differentiated good, determine market form and the range of products available in each industry. We show that market integration benefits or harms the agents in the industries following on industry-specific parameters. As the conditions on gains and losses from trade are independent between countries, bilateral losses from trade can emerge at equilibrium.

Keywords: vertical differentiation; workers’ skills; wage bargaining; trade liberalization; industry asymmetries (search for similar items in EconPapers)
JEL-codes: F14 J00 L11 (search for similar items in EconPapers)
Date: 2004-05
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2004028

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