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Firms Agglomeration and Unions

  • Picard, Pierre M
  • Toulemonde, Eric

This Paper develops a model in which the interaction between product market imperfections, transportation costs, unions and workers immobility across regions creates a tendency for agglomeration of firms when transportation costs are low. The model fits quite well the European experience. It is able to explain the emergence of a centre-periphery pattern with equally populated regions. In the centre, most people work in the unionized industry and earn large wages. In contrast, workers in the periphery are employed at a low wage in a constant return to scale industry.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3323.

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Date of creation: Apr 2002
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Handle: RePEc:cpr:ceprdp:3323
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