| Author: | Mezzetti, Cl. Dinopoulos, E. |
| Title: | Domestic unionization and import competition |
| Journal: | Journal of International Economics
1991 : AUG, VOL. 31:1-2, p. 79-100 |
| Index terms: | TRADE UNIONS IMPORTS COMPETITION INTERNATIONAL NEGOTIATION EMPLOYMENT PAY |
| Language: | eng |
| Abstract: | A model is developed in which a unionized firm competes against a foreign firm for sales in the domestic market. The home country government, the union and two firms play a two-stage game. The negotiated wage and employment levels are simultaneously determined through efficient Nash bargaining. A union is employment (wage) oriented if the employment elasticity of its utility is higher (lower) than the corresponding excess wage elasticity. An increase in the bargaining power of an employment oriented union increases domestic output and welfare. If the union is wage oriented, then protection may decrease output and welfare. A credible threat to shift production abroad increases domestic profits and lowers the negotiated wage. |
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