Unions and Market Integrations in Contests
In this paper, we study the effects of introducing endogenous costs in a Tullock model of rent-seeking. We show that unions can be efficiency improving, and that the firms' level of effort depends more critically upon the number of firms participating in the contests when unions are present. We then study the effects of market integration in a two-country setup. Integrating two initially separate markets is shown to decrease union set wages, but is never the less beneficial to firms of both countries only if there are sufficiently few contestants. However, unions and firms in one country might benefit from integration if their resident country is sufficiently large compared to the country with which it merges.
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|Date of creation:||2000|
|Contact details of provider:|| Postal: Department of Economics, University of Bergen Fosswinckels Gate 6. N-5007 Bergen, Norway|
Web page: http://www.uib.no/econ/
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