This paper considers a unionised monopolistic firm producing a final good with isoelastic demand by using two intermediate commodities, one of which can be either imported from a low-wage country or bought from domestic subcontractors. The paper shows that, notwithstanding wage moderation, the union is better off when the firm chooses offshoring rather than domestic sourcing. The firm is the less likely to choose offshoring the more wage-oriented is the union and the higher is the union bargaining power in the wage negotiation.
Can domestic unions gain from offshoring ? / G. Bognetti, M. Santoni. - In: JOURNAL OF ECONOMICS. - ISSN 0931-8658. - 100:1(2010), pp. 51-67. [10.1007/s00712-010-0120-9]
Can domestic unions gain from offshoring ?
G. BognettiPrimo
;M. SantoniUltimo
2010
Abstract
This paper considers a unionised monopolistic firm producing a final good with isoelastic demand by using two intermediate commodities, one of which can be either imported from a low-wage country or bought from domestic subcontractors. The paper shows that, notwithstanding wage moderation, the union is better off when the firm chooses offshoring rather than domestic sourcing. The firm is the less likely to choose offshoring the more wage-oriented is the union and the higher is the union bargaining power in the wage negotiation.Pubblicazioni consigliate
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