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Trade liberalisation and union wages in a differentiated Bertrand duopoly

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  • Gürtzgen, Nicole
Abstract
In a framework of a unionised international Bertrand duopoly with differentiated products, this paper analyses national labour market interdependencies and the consequences of trade liberalisation for union wages. The analysis suggests that national wages are likely to be strategic complements (substitutes), if products are ordinary substitutes (complements). Under the assumption of linear demand it is shown that bilateral trade liberalisation always leads to higher union set wages and union utilities, regardless of the nature of product rivalry. Analysing the consequences of unilateral tariff reductions it is shown that foreign tariff reductions always give rise to higher union wages and utilities, whereas the impact of unilateral domestic tariff reductions depends an the nature of product rivalry.

Suggested Citation

  • Gürtzgen, Nicole, 2001. "Trade liberalisation and union wages in a differentiated Bertrand duopoly," Thuenen-Series of Applied Economic Theory 28, University of Rostock, Institute of Economics.
    • Handle: RePEc:zbw:roswps:28
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    References listed on IDEAS

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    Cited by:

    1. Lommerud, Kjell Erik & Meland, Frode & Rune Straume, Odd, 2006. "Globalisation and union opposition to technological change," Journal of International Economics, Elsevier, vol. 68(1), pages 1-23, January.
    2. Maiti, Dibyendu & Mukherjee, Arijit, 2013. "Trade cost reduction, subcontracting and unionised wage," Labour Economics, Elsevier, vol. 21(C), pages 103-110.
    3. Mukherjee, Arijit, 2013. "Endogenous domestic market structure and the effects of a trade cost reduction in a unionised industry," Economic Modelling, Elsevier, vol. 32(C), pages 30-33.
    4. Andersen, Torben M. & Sørensen, Allan, 2007. "Product Market Integration and Labour Markets: Aggregate Gains at the Cost of More Inequality?," IZA Discussion Papers 2556, Institute of Labor Economics (IZA).
    5. Aretz, Bodo & Busl, Claudia & Gürtzgen, Nicole & Hogrefe, Jan & Kappler, Marcus & Steffes, Susanne & Westerheide, Peter, 2009. "Endbericht zum Forschungsauftrag fe 13/08: "Ursachenanalyse der Verschiebung in der funktionalen Einkommensverteilung in Deutschland" (Aktenzeichen I A 3 - Vw 3170/08/10035)," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 110510.

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    More about this item

    Keywords

    Trade unions; Oligopoly; Intra-industry trade; Market integration;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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