Declining industries and monopoly unions : a further argument against protection

Wage stickiness is frequently cited as a justification (temporary) protection when a sector is hit by an adverse shock. The present paper, rather than assuming arbitrary wage stickiness, instead models it as an outcome of monopoly union behaviour. It is shown that if intervention was not undertaken before the shock, because of a high marginal social cost of taxation, protection or subsidisation is even less appropriate after the shock occurs.

A hard copy is available in UCD Library at GEN 330.08 IR/UNI