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Market Size and Economic Integration when Labor Markets are Unionized


  • Andromachi S. Piperakis
  • Robert C. Hine
  • Peter W. Wright


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.

Suggested Citation

  • Andromachi S. Piperakis & Robert C. Hine & Peter W. Wright, 2003. "Market Size and Economic Integration when Labor Markets are Unionized," Review of International Economics, Wiley Blackwell, vol. 11(3), pages 483-494, August.
  • Handle: RePEc:bla:reviec:v:11:y:2003:i:3:p:483-494

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    References listed on IDEAS

    1. Feenstra, R.C. & Hanson, G.H., 1995. "Foreign Investment, Outsourcing and Relative Wages," Papers 95-14, California Davis - Institute of Governmental Affairs.
    2. Ray Barrell, 1999. "Manufactures Import Demand: Structural Differences in the European Union," National Institute of Economic and Social Research (NIESR) Discussion Papers 146, National Institute of Economic and Social Research.
    3. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, June.
    4. Jose Campa & Linda S. Goldberg, 1997. "The Evolving External Orientation of Manufacturing Industries: Evidence from Four Countries," NBER Working Papers 5919, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Lommerud, Kjell Erik & Meland, Frode & Rune Straume, Odd, 2006. "Globalisation and union opposition to technological change," Journal of International Economics, Elsevier, vol. 68(1), pages 1-23, January.
    2. Bastos, Paulo & Kreickemeier, Udo & Wright, Peter, 2009. "Oligopoly, open shop unions and trade liberalisation," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 679-686, November.

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