DP1860 Union Wage Bargaining and European Antidumping Policy in Imperfectly Competitive Markets

Author(s): Jozef Konings, Hylke Vandenbussche, Reinhilde Veugelers
Publication Date: April 1998
Keyword(s): cost asymmetry, european antidumping policy, Labour Unions, Nash bargaining, Product Market Competition
JEL(s): C72, D43, F13, J51
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=1860

The purpose of this paper is to analyse the interaction between union bargaining power and the likelihood and type of European antidumping measures (duties and undertakings) in imperfectly competitive product markets. We present a simple theoretical model which is well embedded in EU legal practice, to show that cost asymmetries, induced by union wage bargaining in a European firm, lead to an increase in both the likelihood and the level of antidumping protection against foreign imports of a similar product. In addition, our results indicate that a cost asymmetry, in the form of a unionized wage differential, alters the relative probability of a duty versus an undertaking. We show that the size of these effects depends on the intensity of product market competition. In a further step, we use Belgian firm level micro-data to provide some evidence for our predictions.