Abstract
This paper considers the efficacy and the desirability of home government tariff and subsidy policies when labour market structure and asymmetries in the firms' size matter. In a Cournot-Nash duopolistic sector, a unionized home-firm competes against a non-unionized foreign firm. The home firm-union choose wages and employment in a two-stage Nash bargaining game. The second stage corresponds to the Cournot-Nash game with the foreign firm. Firms may play in strategic substitutes or complements. As the home bargainers recognize that market shares are determined by relative marginal costs, they may use the wage stage strategically. Home government policy choices critically depend upon the bargaining structure and general equilibrium spillovers. Copyright 1996 by Royal Economic Society.
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