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Unionised Oligopoly, Trade Liberalisation and Location Choice

Author

Listed:
  • Kjell Erik Lommerud
  • Frode Meland
  • Lars S¯rgard

Abstract

In a two-country reciprocal dumping model, with one country unionised, we analyse how wage setting and firm location are influenced by trade liberalisation. We show that trade liberalisation can induce FDI, which is at odds with conventional theoretical wisdom and cannot happen in a corresponding model without unionisation. FDI is undertaken partly to win a distributional battle with unionised labour and the incentives to invest abroad can be too large seen from a welfare point of view. Copyright 2003 Royal Economic Society.

Suggested Citation

  • Kjell Erik Lommerud & Frode Meland & Lars S¯rgard, 2003. "Unionised Oligopoly, Trade Liberalisation and Location Choice," Economic Journal, Royal Economic Society, vol. 113(490), pages 782-800, October.
    • Handle: RePEc:ecj:econjl:v:113:y:2003:i:490:p:782-800
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    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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