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The Location of Firms in Unionized Countries

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  • Jakob Roland Munch

    () (Department of Economics, University of Aarhus, Denmark)

Abstract

This paper develops a two-country model of international trade with Cournot competition. The labor markets are unionized so that a trade union bargains efficiently with each firm over wage and employment. It is shown that if the bargaining power of unions differs among 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.

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Bibliographic Info

Paper provided by School of Economics and Management, University of Aarhus in its series Economics Working Papers with number 1999-12.

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Length: 23
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Handle: RePEc:aah:aarhec:1999-12

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Web page: http://www.econ.au.dk/afn/

Related research

Keywords: Integration; agglomeration; trade unions;

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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, 2011. "Unionisation Triggers Tax Incentives to Attract Foreign Direct Investment," Economic Journal, Royal Economic Society, vol. 121(553), pages 793-818, 06.
  3. Picard, Pierre M. & Toulemonde, Eric, 2006. "Firms agglomeration and unions," European Economic Review, Elsevier, vol. 50(3), pages 669-694, April.
  4. Kjell Erik Lommerud & Frode Meland & Lars Sørgard, 2002. "Unionized Oligopoly, Trade Liberalization and Location Choice," CESifo Working Paper Series 777, CESifo Group Munich.
  5. Kenmei Tsubota, 2009. "Agglomeration and wage bargaining," KIER Working Papers 675, Kyoto University, Institute of Economic Research.
  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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