Working Paper: CEPR ID: DP1860
Authors: Jozef Konings; Hylke Vandenbussche; Reinhilde Veugelers
Abstract: 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.
Keywords: European antidumping policy; Cost asymmetry; Labour unions; Nash bargaining; Product market competition
JEL Codes: C72; F13; J51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Union bargaining power (J50) | Likelihood of antidumping measures (F18) |
| Union bargaining power (J50) | Cost asymmetries between domestic and foreign firms (F23) |
| Cost asymmetries between domestic and foreign firms (F23) | Likelihood of antidumping measures (F18) |
| Union bargaining power (J50) | Type of antidumping measure (duty vs. undertaking) (F18) |
| Union bargaining power (J50) | Greater likelihood of duties being imposed over undertakings (L49) |
| Weak competition (L13) | Greater likelihood of duties being imposed over undertakings (L49) |