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Unionised Oligopoly, Trade Liberalisation and Location Choice

Lommerud, Kjell Erik; Meland, Frode; Sørgard, Lars
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URI
https://hdl.handle.net/1956/1403
Date
2003-03
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  • Stein Rokkan Centre for Social Studies - Working Papers [231]
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.
Publisher
Stein Rokkan Centre for Social Studies
Series
3-2003
Working Paper

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