Download This PaperUnionized Oligopoly, Trade Liberalization and Location Choice
35 Pages Posted: 10 Dec 2002
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Unionized Oligopoly, Trade Liberalization and Location Choice
Unionized Oligopoly, Trade Liberalization and Location Choice
Date Written: September 2002
Abstract
In a two-country reciprocal dumping model, with one country unionized, we analyze how wage setting and firm location are influenced by trade liberalization. We show that trade liberalization can induce FDI, which is at odds with conventional theoretical wisdom and cannot happen in a corresponding model without unionization. FDI is undertaken partly to win a distributional battle with unionized labor, and the incentives to invest abroad can be too large seen from a welfare point of view.
Keywords: Unionized Oligopoly, Economic Integration, Foreign Direct Investment
JEL Classification: D43, F15, F16, F21, J51
Suggested Citation: Suggested Citation
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Lars Sorgard
Norwegian School of Economics and Business Administration (NHH) ( email )
Helleveien 30
Bergen, NO-5045
Norway
+47 5 595 9723 (Phone)
+47 5 595 9543 (Fax)
Norwegian School of Economics (NHH) - Department of Economics
Helleveien 30
N-5035 Bergen
Norway
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