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Foreign direct investment and wage bargaining

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Author Info

  • Robin Naylor
  • Michele Santoni

Abstract

We derive the sub-game perfect Nash equilibria for the foreign direct investment (FDI) game played between two unionized firms. We show that FDI is less likely, ceteris paribus, the greater is union bargaining power and the more substitutable are the firms' products in the potential host country. We also examine the conditions under which the FDI game between firms will possess the characteristics of a Prisoners' Dilemma.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/0963819032000049178
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal The Journal of International Trade & Economic Development.

Volume (Year): 12 (2003)
Issue (Month): 1 ()
Pages: 1-18

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Handle: RePEc:taf:jitecd:v:12:y:2003:i:1:p:1-18

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Related research

Keywords: Foreign direct investment; oligopoly; wage bargaining;

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Citations

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Cited by:
  1. Dermot Leahy & Catia Montagna, 2005. "Union legislation and export platform FDI," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(4), pages 437-452.
  2. Marta Aloi & Manuel Leite-Monteiro & Teresa Lloyd-Braga, . "Unionized Labor Markets and Globalized Capital Markets," Discussion Papers 08/10, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
  3. Tapio Palokangas, 2009. "Investment, expropriation, and unionization," Economics of Governance, Springer, vol. 10(1), pages 27-42, January.
  4. Frederic Palomino & Jozsef Sakovics, 2004. "Inter-league competition for talent vs. competitive balance," ESE Discussion Papers 96, Edinburgh School of Economics, University of Edinburgh.
  5. Brännlund, Runar & Nordström, Jonas & Svedin, Dick, 2004. "Foreign ownership and effects on employment and wages: The case of Sweden," UmeÃ¥ Economic Studies 638, Umeå University, Department of Economics, revised 01 Nov 2004.
  6. Junichiro Ishida & Noriaki Matsushima, 2005. "FDI may help rival firms," Economics Bulletin, AccessEcon, vol. 6(22), pages 1-8.
  7. repec:ebl:ecbull:v:6:y:2005:i:22:p:1-8 is not listed on IDEAS
  8. Andreas Haufler & Ferdinand Mittermaier, 2008. "Unionisation triggers tax incentives to attract foreign direct investment," Working Papers 052, Bavarian Graduate Program in Economics (BGPE).
  9. Choi, Kangsik, 2010. "The Timing of Endogenous Wage Setting under Bertrand Competition in a Unionized Mixed Duopoly," MPRA Paper 20205, University Library of Munich, Germany.
  10. Dermot Leahy & Catia Montagna, 2004. "Union Bargaining Power, Labour Standards and Foreign Direct Investment," Dundee Discussion Papers in Economics 168, Economic Studies, University of Dundee.
  11. Palokangas, Tapio K., 2003. "Foreign Direct Investment, Labour Market Regulation and Self-Interested Governments," IZA Discussion Papers 793, Institute for the Study of Labor (IZA).
  12. Domenico Buccella, 2011. "Labor unions and economic integration: A review," Económica, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata, vol. 0, pages 25-89, January-D.
  13. Dermot Leahy & Catia Montagna, 2005. "Union Bargaining Power, Social Dumping, and Foreign Direct Investment," International Trade 0510001, EconWPA.
  14. Junichiro Ishida & Noriaki Matsushima, 2008. "Domestic Competition and Foreign Direct Investment in Unionized Oligopoly," ISER Discussion Paper 0757, Institute of Social and Economic Research, Osaka University, revised Oct 2009.

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