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Economic Integration, Market Power and Technological Change

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  • Palokangas, Tapio K.

    () (University of Helsinki)

Abstract

We examine a common market which expands by integrating new regions. Capitalists are strategically interdependent through the goods market and they improve their productivity through R&D. Production and R&D employ unionized workers. The purpose of integration is to maximize a weighed average of workers' and capitalists' utilities. The main findings are as follows. Integration benefits capitalists more than workers. If labour unions are strong enough, then the common market can expand indefinitely. Otherwise, there is an upper limit for integration. This is the higher, the higher producer market power or the stronger the capitalists' political influence.

Suggested Citation

  • Palokangas, Tapio K., 2005. "Economic Integration, Market Power and Technological Change," IZA Discussion Papers 1592, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1592
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    References listed on IDEAS

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    More about this item

    Keywords

    endogenous growth; economic integration; market power;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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