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International Production and Wage Coordination in an Integrated Economy (revised)

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  • Domenico Buccella

Abstract

Key aspects in economic integrated areas like the EU are both the internationalization of productive activities, which usually occurs in unionized countries, and the ongoing process of labor market integration. In a symmetric two-country duopoly model with integrated product markets, this paper investigates the incentives for unions to coordinate wage demands in the presence of transaction costs. It shows that, contrary to conventional wisdom, under certain conditions wage coordination could lead from a social point of view to a Pareto superior outcome respect to separate wage settings.

Suggested Citation

  • Domenico Buccella, 2011. "International Production and Wage Coordination in an Integrated Economy (revised)," FIW Working Paper series 025, FIW.
  • Handle: RePEc:wsr:wpaper:y:2011:i:025
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    References listed on IDEAS

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    1. Naylor, Robin, 1999. "Union Wage Strategies and International Trade," Economic Journal, Royal Economic Society, vol. 109(452), pages 102-125, January.
    2. Davidson, Carl, 1988. "Multiunit Bargaining in Oligopolistic Industries," Journal of Labor Economics, University of Chicago Press, vol. 6(3), pages 397-422, July.
    3. Chiara Strozzi, 2007. "Product Market Integration and Union Collusion," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 17-36, February.
    4. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
    5. Huizinga, Harry, 1993. " International Market Integration and Union Wage Bargaining," Scandinavian Journal of Economics, Wiley Blackwell, vol. 95(2), pages 249-255.
    6. Straume, Odd Rune, 2002. "Union collusion and intra-industry trade," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 631-652, May.
    7. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    8. Zhao, Laixun, 1998. "The Impact of Foreign Direct Investment on Wages and Employment," Oxford Economic Papers, Oxford University Press, vol. 50(2), pages 284-301, April.
    9. BORGHIJS, Alain & DU CAJU, Philip, 1999. "EMU and European trade union cooperation," Working Papers 1999013, University of Antwerp, Faculty of Applied Economics.
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    Cited by:

    1. repec:bla:reviec:v:25:y:2017:i:3:p:534-566 is not listed on IDEAS
    2. Carsten Eckel & Hartmut Egger, 2017. "The Dilemma of Labor Unions: Local Objectives vs Global Bargaining," Review of International Economics, Wiley Blackwell, vol. 25(3), pages 534-566, August.

    More about this item

    Keywords

    international production; wage coordination; labor unions;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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