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Unionized Bertrand Duopoly and Strategic Export Policy

Author

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  • Subhayu Bandyopadhyay
  • Sudeshna C. Bandyopadhyay
  • And Eun‐Soo Park

Abstract

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.

Suggested Citation

  • Subhayu Bandyopadhyay & Sudeshna C. Bandyopadhyay & And Eun‐Soo Park, 2000. "Unionized Bertrand Duopoly and Strategic Export Policy," Review of International Economics, Wiley Blackwell, vol. 8(1), pages 164-174, February.
    • Handle: RePEc:bla:reviec:v:8:y:2000:i:1:p:164-174
    DOI: 10.1111/1467-9396.00213
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    Cited by:

    1. Wen‐Jung Liang & Chao‐Cheng Mai, 2010. "Optimal Trade Policy with Horizontal Differentiation and Asymmetric Costs," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 302-310, May.
    2. Takauchi, Kazuhiro, 2015. "Strategic export policy, monopoly carrier, and product differentiation," MPRA Paper 66003, University Library of Munich, Germany.
    3. Ghosh, Arghya & Saha, Souresh, 2015. "Price competition, technology licensing and strategic trade policy," Economic Modelling, Elsevier, vol. 46(C), pages 91-99.
    4. Luciano Fanti & Domenico Buccella, 2020. "Strategic trade policy with socially concerned firms," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 67(3), pages 269-292, September.

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