ECON 423 Lecture Notes - Lecture 4: Trade Union, Unfair Competition, Predatory Pricing
17 Jan 2018
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Myth 1: myth: if country weak/strong: doesn"t matter, you gain from trade (and free trade) If you want to free trade with us, form a labour union. Gov"t usually focuses on short run because they want to get re-elected: reason: keep labour costs down will create trade surplus create foreign exchange reserves, china: controls it can manipulate the reserve . Idea: wages are not natural, employers can afford to pay more: activists can argue against mncs because they could afford to pay workers more. Many goods: country can have a few goods! How to construct demand/supply of labour : rs: supply, l/l*: assume that labour supply is fixed, supply is a fixed number independent of the wage rate, labour supply l/l, rd: relative demand, not so easy . Example from textbook: a: unit required in home country, a*: foreign country: e. g.
