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Economic Integration, Market Power and Technological Change

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Author Info
Tapio Palokangas () (University of Helsinki, HECER and IZA Bonn)

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Abstract

We examine a common market which expands by integrating new regions. Capitalists are strategically interdependent through the goods market and they improve their productivity through R&D. Production and R&D employ unionized workers. The purpose of integration is to maximize a weighed average of workers’ and capitalists’ utilities. The main findings are as follows. Integration benefits capitalists more than workers. If labour unions are strong enough, then the common market can expand indefinitely. Otherwise, there is an upper limit for integration. This is the higher, the higher producer market power or the stronger the capitalists’ political influence.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1592.

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Length: 24 pages
Date of creation: May 2005
Date of revision:
Handle: RePEc:iza:izadps:dp1592

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Related research
Keywords: economic integration; market power; endogenous growth;

Find related papers by JEL classification:
F15 - International Economics - - Trade - - - Economic Integration
J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Belot, M.V.K. & Ours, J.C. van, 2001. "Unemployment and labor market institutions : an empirical analysis," Discussion Paper 50, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  2. Tapio Palokangas, 2005. "International Labor Union Policy and Growth with Creative Destruction," Review of International Economics, Blackwell Publishing, vol. 13(1), pages 90-105, 02. [Downloadable!] (restricted)
  3. Cahuc, Pierre & Michel, Philippe, 1996. "Minimum wage unemployment and growth," European Economic Review, Elsevier, vol. 40(7), pages 1463-1482, August. [Downloadable!] (restricted)
    Other versions:
  4. Walde, Klaus, 1999. "A Model of Creative Destruction with Undiversifiable Risk and Optimising Households," Economic Journal, Royal Economic Society, vol. 109(454), pages C156-71, March. [Downloadable!] (restricted)
  5. Connolly, Robert A & Hirsch, Barry T & Hirschey, Mark, 1986. "Union Rent Seeking, Intangible Capital, and Market Value of the Firm," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 567-77, November. [Downloadable!] (restricted)
  6. repec:cup:cbooks:9780521663236 is not listed on IDEAS
  7. Palokangas, Tapio, 1996. "Endogenous growth and collective bargaining," Journal of Economic Dynamics and Control, Elsevier, vol. 20(5), pages 925-944, May. [Downloadable!] (restricted)
  8. Meckl, Jurgen, 2004. "Accumulation of technological knowledge, wage differentials, and unemployment," Journal of Macroeconomics, Elsevier, vol. 26(1), pages 65-82, March. [Downloadable!] (restricted)
  9. Julian R. Betts & Cameron W. Odgers & Michael K. Wilson, 2001. "The effects of unions on research and development: an empirical analysis using multi-year data," Canadian Journal of Economics, Canadian Economics Association, vol. 34(3), pages 785-806, August. [Downloadable!] (restricted)
  10. Agell, Jonas & Lommerud, Kjell Erik, 1997. "Minimum wages and the incentives for skill formation," Journal of Public Economics, Elsevier, vol. 64(1), pages 25-40, April. [Downloadable!] (restricted)
  11. Peretto, Pietro F., 1998. "Market Power, Growth and Unemployment," Working Papers 98-16, Duke University, Department of Economics. [Downloadable!]
  12. Naercio Menezes-Filho & David Ulph & John Van Reenen, 1998. "R&D and unionism: Comparative evidence from British companies and establishments," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 52(1), pages 45-63, October.
  13. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
    Other versions:
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