Unionization and Strategic Trade Policy

Download or read book Unionization and Strategic Trade Policy written by Phillip Swagel and published by International Monetary Fund. This book was released on 2000-03 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the effect of unionization on welfare and trade policy in a model of duopolists competing in a third market. It shows that the traditional result that the presence of a union necessitates a stronger strategic trade policy to reach the optimal level of welfare depends on the mode of competition. With Bertrand duopolists, a union can be welfare-improving; it can also lead to a weaker trade policy, or even reverse the direction of the optimal policy. The results highlight the importance for trade policy of understanding the nature of firm behavior and the institutional features of the labor market.