Trade Liberalization with Imperfect Competition in Goods and Labour Markets

John Driffill A · Frederick van der Ploeg

52 citations0/0 files storedScandinavian Journal of Economics

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Global trade and economics Labor Movements and Unions Labor market dynamics and wage inequality

Abstract

The effects of removing tariffs and trade barriers on the behaviour of utilitarian monopoly trade unions are considered. A model of intra-industry trade in differentiated commodities under monopolistic competition and increasing returns to scale is used. National and international trade unions are distinguished. Removal of trade barriers reduces monopoly power in labour markets. This forces wages down and increases employment and the number of firms in the differentiated goods industry. The removal of trade barriers appears to increase strongly the incentive for national unions to cooperate internationally. Such cooperation would undermine the benefits of trade liberalization for non-members of the unions.

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References

1975MONOPOLISTIC COMPETITION AND OPTIMUM PRODUCT DIVERSITY 1979Increasing returns, monopolistic competition, and international trade 1988Bargaining Structure, Corporatism and Macroeconomic Performance 1985Market Structure and Foreign Trade: Increasing Returns, Imperfect Competition and the International Economy 1985Market structure and foreign trade 1976Product Selection, Fixed Costs, and Monopolistic Competition 1988Completing the Internal Market in the European Community: Some Industry Simulations 1987Imperfect competition and international trade

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