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- Title
The Location of Firms in Unionized Countries.
- Authors
Munch, Jakob Roland
- Abstract
Abstract This paper develops a two-country economic geography model with Cournot competition, where the labor markets are unionized so that trade unions bargain efficiently with each firm over wages and employment. Agglomeration forces are present due to wage premia obtained by the trade unions. It is shown that if the bargaining power of unions differs across countries then, as trade costs are reduced, the country with relatively weak unions gradually acquires all firms. However, for a range of trade costs, it is also a locally stable equilibrium for all firms to locate in the country with strong unions.
- Subjects
INDUSTRIAL location; LABOR unions
- Publication
Scandinavian Journal of Economics, 2003, Vol 105, Issue 1, p49
- ISSN
0347-0520
- Publication type
Article
- DOI
10.1111/1467-9442.00004