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International Production and Wage Coordination in an Integrated Economy (revised)

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  • Domenico Buccella

Abstract

Key aspects in economic integrated areas like the EU are both the internationalization of productive activities, which usually occurs in unionized countries, and the ongoing process of labor market integration. In a symmetric two-country duopoly model with integrated product markets, this paper investigates the incentives for unions to coordinate wage demands in the presence of transaction costs. It shows that, contrary to conventional wisdom, under certain conditions wage coordination could lead from a social point of view to a Pareto superior outcome respect to separate wage settings.

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Bibliographic Info

Paper provided by FIW in its series FIW Working Paper series with number 025.

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Length: 14
Date of creation: Jul 2011
Date of revision:
Handle: RePEc:wsr:wpaper:y:2011:i:025

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Keywords: international production; wage coordination; labor unions;

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  1. Horn, H. & Wolinsky, A., 1988. "Bilateral Monopolies And Incentives For Merger," Papers 410, Stockholm - International Economic Studies.
  2. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
  3. Straume, O.R., 1999. "Union Collusion and Intra-Industry Trade," Norway; Department of Economics, University of Bergen 1399, Department of Economics, University of Bergen.
  4. Huizinga, Harry, 1993. " International Market Integration and Union Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(2), pages 249-55.
  5. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
  6. Zhao, Laixun, 1998. "The Impact of Foreign Direct Investment on Wages and Employment," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 284-301, April.
  7. repec:ant:wpaper:1999013 is not listed on IDEAS
  8. Chiara Strozzi, 2007. "Product Market Integration and Union Collusion," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 17-36, 02.
  9. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-25, January.
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