Masahisa Fujita (Department of Economics, Southern Methodist University and CORE, Catholic University of Louvain) Shlomo Weber (Southern Methodist University)
Abstract
In this paper we consider a model with two industrialised countries and immigrants that come from “the rest of the world”. The countries are distinguished on the basis of three parameters: population size, bias towards immigrants, and production complementarity between native population and immigrants. We consider a non-cooperative game where each country makes a strategic choice of its immigration quotas. We first show that our game admits a unique pure strategy Nash equilibrium and then study the welfare implications of countries’ choices. It turns out that a county with a higher degree of production complementarity and a higher level of tolerance towards immigrants would allow a larger immigration quota and achieve a higher welfare level. Our results call for coordinated and harmonised immigration policies that may improve the welfare of both countries.
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Publisher Info
Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number
2004.2.
Find related papers by JEL classification: C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games F22 - International Economics - - International Factor Movements and International Business - - - International Migration O3 - Economic Development, Technological Change, and Growth - - Technological Change R1 - Urban, Rural, and Regional Economics - - General Regional Economics
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