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The Location of Firms in Unionized Countries

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  • Jakob Roland Munch

Abstract

This paper develops a two-country economic geography model with Cournot competition, where the labor markets are unionized so that trade unions bargain efficiently with each firm over wages and employment. Agglomeration forces are present due to wage premia obtained by the trade unions. It is shown that if the bargaining power of unions differs across countries then, as trade costs are reduced, the country with relatively weak unions gradually acquires all firms. However, for a range of trade costs, it is also a locally stable equilibrium for all firms to locate in the country with strong unions. Copyright The editors of the "Scandinavian Journal of Economics", 2002 .

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Bibliographic Info

Article provided by Wiley Blackwell in its journal The Scandinavian Journal of Economics.

Volume (Year): 105 (2003)
Issue (Month): 1 (03)
Pages: 49-72

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Handle: RePEc:bla:scandj:v:105:y:2003:i:1:p:49-72

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. Silvia Rocha‐Akis & Ronnie Schöb, 2011. "Welfare Policy in the Presence of Unionised Labour and Internationally Mobile Firms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 93-119, 03.
  2. Andreas Haufler & Ferdinand Mittermaier, 2008. "Unionisation triggers tax incentives to attract foreign direct investment," Working Papers 052, Bavarian Graduate Program in Economics (BGPE).
  3. Persyn, Damiaan, 2013. "Union wage demands with footloose firms and agglomeration forces," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 142-150.
  4. Kenmei Tsubota, 2009. "Agglomeration and wage bargaining," KIER Working Papers 675, Kyoto University, Institute of Economic Research.
  5. Damiaan Persyn, 2009. "Union wage demands with footloose firms," LICOS Discussion Papers 22809, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  6. Damiaan Persyn, 2006. "Trade and Race-to-the-bottom Wage Competition," LICOS Discussion Papers 17306, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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