Unionized Bertrand Duopoly and Strategic Export Policy
The paper reports that an export subsidy is optimal for a unionized Bertrand duopoly. Following results published by Brander and Spencer (Journal of International Economics, 1988, pp. 217-34), this establishes the robustness of export subsidization to the mode of competition (Cournot or Bertrand), and contrasts with nonunion results in the literature. If both firms are unionized and both governments pursue active trade policies, a subsidy remains optimal except for a narrow range of extreme substitutability between products. Nations with a lower opportunity cost of labor employ more aggressive policies in equilibrium.
Bandyopadhyay, S., Bandyopadhyay, S. C., & Park, E. S. (2000). Unionized Bertrand Duopoly and Strategic Export Policy. Review of International Economics, 8(1), pp. 164-174. Blackwell Publishing Ltd.
The definitive version is available at https://doi.org/10.1111/1467-9396.00213
Keywords and Phrases
competition; export; trade policy; trade union
International Standard Serial Number (ISSN)
Article - Journal
© 2000 Blackwell Publishing Ltd, All rights reserved.
01 Feb 2000