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Wage Bargaining, Vertical Differentiation and Intra-Industry Trade Liberalization

Author

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  • Emanuele Bacchiega

Abstract

This article appraises the effects of trade liberalization between two industries that have different endowments of skilled labor. Skilled labor is necessary for the production of higher-quality variants of a vertically differentiated good. Skilled labor endowments, therefore, determine the patternof specialization of industries as well as their market structure, both in the final goods market and in the labor market. We analyze how market integration benefits or harms the agents in the industries by delving into the linkages between labor and product markets, and show that bilateral losses from trade can emerge at equilibrium. JEL Classification: L13, J51, F16.

Suggested Citation

  • Emanuele Bacchiega, 2013. "Wage Bargaining, Vertical Differentiation and Intra-Industry Trade Liberalization," Recherches économiques de Louvain, De Boeck Université, vol. 79(1), pages 35-57.
    • Handle: RePEc:cai:reldbu:rel_791_0035
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    Cited by:

    1. Amal Hili & Rim Lahmandi-Ayed & Hejer Lasram, 2016. "Differentiation, labor market and globalization," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(6), pages 809-833, September.
    2. Patrice Cassagnard & Tendai Espinosa, 2022. "From boycott to buycott: is activism from the North good for the South?," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 158(4), pages 1107-1135, November.
    3. Patrice Cassagnard & Tendai Espinosa, 2019. "From Boycott to Buycott: Is Activism from the North Good for the South?," Working Papers hal-02623685, HAL.
    4. Patrice CASSAGNARD & Tendai ESPINOSA, 2019. "From Boycott to Buycott: Is Activism from the North Good for the South?," Working Papers 2019-2020_3, CATT - UPPA - Université de Pau et des Pays de l'Adour, revised Dec 2019.
    5. Patrice Cassagnard & Tendai Espinosa, 2019. "From Boycott to Buycott: Is Activism from the North Good for the South?," Working papers of CATT hal-02623685, HAL.

    More about this item

    Keywords

    vertical differentiation; wage bargaining; trade liberalization;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions

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