FDI, International Trade and Union Collusion
This paper deals with firms’ decision related to international activities in a twocountry oligopoly model with a homogeneous product and unionized labor markets. Using a three-stage non-cooperative game with firms being first movers, it is found that firms’ strategies are affected by the scale of fixed costs of direct investments, trade costs and union wage strategies in labor markets, giving rise to different productive structures in equilibrium. Scopes and incentives for unions’ collusion are analyzed. The consequences on national welfare levels of both unions and firms’ strategic behavior are also investigated, deriving some policy insights.
|Date of creation:||Jun 2010|
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|Order Information:|| Postal: FIW Project Office Austrian Institute of Economic Research Arsenal Objekt 20 A-1030 Vienna|
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- Jeanine Thal, 2005.
"Optimal Collusion under Cost Asymmetry,"
2005-36, Centre de Recherche en Economie et Statistique.
- Naylor, Robin, 1998. "International trade and economic integration when labour markets are generally unionised," European Economic Review, Elsevier, vol. 42(7), pages 1251-1267, July.
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