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| Author: | Swagel, P. |
| Title: | Union behavior, industry rents, and optimal policies |
| Journal: | International Journal of Industrial Organization
2000 : AUG, VOL. 18:6, p. 925-947 |
| Index terms: | Industrial policy Steel industry Economic rent Labour markets Capacity Subsidies Trade unions USA Models |
| Language: | eng |
| Abstract: | This paper examines the welfare gains from strategic industrial policy in the U.S. steel industry, focusing on the role of capacity utilization and the potential gains from capturing labour rents. With underutilized capacity, strategic policies to capture labour rents lead to an endogenous response that diminishes their importance. On the other hand, reducing domestic labour market distortions results in welfare gains nearly as large as those from the optimal subsidy. This suggests that the focus on labour rents as the subject of industrial policy is overstated, at least in manufacturing industries such as integrated steel. |
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