Market Size and Economic Integration when Labor Markets are Unionized
The paper explores the effects of economic integration on trade, wages, and welfare when market sizes differ. A duopoly model with two-way intraindustry trade in similar products and with unionized labor markets is employed. It is confirmed that, for a wide range of different relative market sizes, integration leads to higher wages, employment, and welfare. However, where market sizes differ widely, the reduction of trade barriers leads to a reduction of wages, employment, and-in some circumstances-welfare in the country with the large market. Copyright Blackwell Publishing Ltd 2003.
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Volume (Year): 11 (2003)
Issue (Month): 3 (08)
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