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The Location of Firms in Unionized Countries

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Author Info
Jakob Roland Munch () (Department of Economics, University of Aarhus, Denmark)

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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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Publisher 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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Handle: RePEc:aah:aarhec:1999-12

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Related research
Keywords: Integration; agglomeration; trade unions;

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Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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  1. Andreas Haufler & Ferdinand Mittermaier, 2008. "Unionisation Triggers Tax Incentives to Attract Foreign Direct Investment," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Damiaan Persyn, 2006. "Trade and Race-to-the-bottom Wage Competition," LICOS Discussion Papers 17306, LICOS - Centre for Institutions and Economic Performance, K.U.Leuven. [Downloadable!]
  3. Lommerud, Kjell Erik & Meland, Frode & Sørgard, Lars, 2001. "Unionized Oligopoly, Trade Liberalization and Location Choice," CEPR Discussion Papers 2990, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Kenmei Tsubota, 2009. "Agglomeration and wage bargaining," KIER Working Papers 675, Kyoto University, Institute of Economic Research. [Downloadable!]
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