Recent Articles

Read more about our latest published articles.

Review’s Archive

Corresponding Author:
Luciano Fanti, Department of Economics and Management, University of Pisa, Italy

Corresponding Coauthors:
Domenico Buccella, Department of Economics, Kozminski University, Warsaw, Poland

Strategic Trade Policy with Asymmetric Bargaining Agenda

(pp. 257-274)
JEL classification: F16, J51, L13
Keywords: Export Subsidy/Tax, Efficient Bargaining, Right-to-Manage, Cournot Duopoly, Asymmetric Equilibrium


This paper challenges the conventional wisdom of the strategic trade policy – in which governments set subsidies for their own exporter firms – under unionisation by considering the realistic difference in the labour market institutions between producing countries, i.e. asymmetric bargaining agenda (Efficient Bargaining, EB, and Right-to Manage, RTM) in rival firms. We show that 1) the government whose firm is EB (resp. RTM) always finds convenient to set an export tax (resp. an export subsidy), regardless of whether the other government intervenes; 2) an asymmetric equilibrium emerges in which only one government intervenes; 3) under appropriate side-payments, governments would find beneficial to coordinate either over mutual intervention or free trade, with the latter ensuring higher welfare levels; 4) the asymmetric equilibrium is preferred by the RTM country because its national social welfare under intervention is always higher than under free trade. These results show that active trade policies in the RTM country partially solve the classical Prisoner’s Dilemma of the trade policy game.

Read the full article

Download the article in PDF format to read and print.


Bandyopadhyay, S. and S.C. Bandyopadhyay (1999), “Unionization and International Market Share Rivalry: A Paradox”, Review of International Economics, 7(1), 153-161.

Bandyopadhyay, S. and S.C. Bandyopadhyay (2001), “Efficient Bargaining, Welfare and Strategic Export Policy”, Journal of International Trade & Economic Development, 10(2), 133-149.

Brander, J.A. and B.J. Spencer (1985), “Export Subsidies and International Market Share Rivalry”, Journal of International Economics, 18(1-2), 83-100.

Brander, J.A., and B.J. Spencer (1988), “Unionized Oligopoly and International Trade Policy”, Journal of International Economics, 24(3-4), 217-234.

Buccella, D. (2011), Corrigendum to “The Strategic Choice of Union Oligopoly Bargaining Agenda” [Int. J. Ind. Organ. 17 (1999) 1029-1040], International Journal of Industrial Organization, 29(6), 690-693.

Calmfors, L. (1993), “Centralisation of Wage Bargaining and Macroeconomic Performance. A Survey”,  OECD Economic Studies n. 21.

Carmichael, C.M. (1987), “The Control of Export Credit Subsidies and its Welfare Consequences”, Journal of International Economics, 23(1-2), 1-19.

Fanti, L. (2015), “Union-Firm Bargaining Agenda: Right-to-Manage or Efficient Bargaining?”, Economics Bulletin, 35(2), 936-948.

Fanti, L. and D. Buccella (2016), “Strategic Trade Policy and Union-Firm Bargaining Agenda”, The Journal of International Trade & Economic Development, 25(6), 787-808

Fanti, L. and D. Buccella (2017), Timing and the Selection of the Bargaining Agenda, in: L. Fanti (Ed.), “Oligopoly, Institutions and the Performance of the Firms”, Pisa University Press: Pisa, 57-84.

Lawson, N.P. (2011), “Is Collective Bargaining Pareto Efficient? A Survey of the Literature”, Journal of Labor Research, 32(3), 282-304.

Leahy, D. and J.P. Neary (1997), “Public Policy towards R&D in Oligopolistic Industries”, The American Economic Review, 87(4), 642-662.

Manning, A. (1987a), “An Integration of Trade Union Models in a Sequential Bargaining Framework”, The Economic Journal, 97(385), 121-139.

Manning, A. (1987b), “Collective Bargaining Institutions and Efficiency”, European Economic Review, 31(1-2), 168-176.

McDonald, I.M. and R.M. Solow (1981), “Wage Bargaining and Employment”, American Economic Review,  71(5), 896-908.

Mezzetti, C. and E. Dinopoulos (1991), “Domestic Unionization and Import Competition”, Journal of International Economics, 31(1-2), 79-100.

Neary, J.P. and D. Leahy (2000), “Strategic Trade and Industrial Policy towards Dynamic Oligopolies”, The Economic Journal, 110(463), 484-508.

Nickell, S.J. and M. Andrews (1983), “Unions Real Wages and Employment in Britain 1951–1979”, Oxford Economic Papers,  35, 183-206, Supplement.

OECD (2012), OECD Employment Outlook 2012. Chapter 2: What Makes Labour Market Resilient during Recessions?, OECD Publishing: Paris. 

Pencavel, J.H. (1984), “The Trade-Off between Wages and Employment in Trade Union Objectives”, Quarterly Journal of Economics,  99(2), 215-231.

Scott, R.E. (2016), “U.S.-Korea Trade Deal Resulted in Growing Trade Deficits and more than 95,000 Lost U.S. Jobs”, Working Economics Blog, May 5th, 2016, Economic Policy Institute. Available online at <>.

Scott, R.E. and E. Glass,(2016), “Trans-Pacific Partnership, Currency Manipulation, Trade and Jobs”, Briefing Paper #420, Economic Policy Institute. Available online at <>.

Register your account

First-time users should click on “Register your account” and enter the requested information. Upon successful registration, you will receive an e-mail with instructions to verify your registration.

Submission Guidelines

Authors’ login

Use the assigned user ID and password to login. Please, do not register again. Usernames and passwords may be changed after.

Quick search by author:
Back to the top

Institute for International Economics
of the Genoa Chamber of Commerce

Istituto di Economia Internazionale
Camera di Commercio di Genova
Via Garibaldi, 4 (III piano) - 16124 Genova (Italy)