In a two‐country reciprocal dumping model, with one country unionised, we analyse how wage setting and firm location are influenced by trade liberalisation. We show that trade liberalisation can induce FDI, which is at odds with conventional theoretical wisdom and cannot happen in a corresponding model without unionisation. FDI is undertaken partly to win a distributional battle with unionised labour and the incentives to invest abroad can be too large seen from a welfare point of view.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We analyze unionized firms' incentives to outsource intermediate goods production to foreign (low-cost) subcontractors. Such outsourcing leads to increased wages for the remaining inhouse production. We find that stronger unions, which imply higher domestic wages, reduce incentives for international outsourcing. Though somewhat surprising, this result provides a theoretical reconciliation of the empirically observed trends of deunionization and increased international outsourcing in many countries. We further show that globalization -interpreted as either market integration or increased product market competition -will increase incentives for international outsourcing. Terms of use: Documents in EconStor mayJEL Code: F16, J51, L24.

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We study how incentives for North-South technology transfers in multinational enterprises are affected by labour market institutions. If workers are collectively organised, incentives for technology transfers are partly governed by firms' desire to curb trade union power. This will affect not only the extent but also the type of technology transfer. While skill upgrading of southern workers benefits these workers at the expense of northern worker welfare, quality upgrading of products produced in the South may harm not only northern but also southern workers. A minimum wage policy to raise the wage levels of southern workers may spur technology transfer, possibly to the extent that the utility of northern workers decline. These conclusions are reached in a setting where a unionised multinational multiproduct firm produces two vertically differentiated products in northern and southern subsidiaries, respectively. Terms of use: Documents inJEL-Code: F23, J51, O33.

The literature on emissions trading and strategic behavior under the Kyoto Protocol typically claims that a sellers' cartel featuring countries of the former Soviet Union can be quite profitable for its members. Using a Cournot-type quota exchange model, we show that this conclusion is sensitive to the assumption that large permit buyers, like the EU and Japan, are supposed to behave as price takers. Our result is driven by the same mechanisms as those found in Salant, Switzer and Reynolds (1983). We also discuss alternative models of permit exchange.

We study ex post outsourcing of production in an imperfectly discriminating contest, interpreted here as a research tournament or a procurement contest for being awarded some production contract. We find that the possibility of outsourcing increases competition between the contestants, leading to higher total contest effort, if the contest winner is expected to obtain a sufficiently large share of ex post outsourcing rents. Under reasonable assumptions, outsourcing tends also to increase the number of active contestants, strengthening the case for outsourcing to increase total contest effort. If such effort is socially wasteful, outsourcing creates a welfare trade-off between ex ante and ex post efficiency. Copyright Springer Science+Business Media, LLC 2007Contests, Non-price competition, Outsourcing,

This paper considers two integrated countries that differ only in their labour markets: one country hosts unions, whereas the other one pays competitive wages. These institutional differences are a source of comparative advantage, which crucially impact inter-industry trade and welfare in the open economy. In this setting, deunionization exerts opposing welfare effects in the two economies. Increasing product market competition is beneficial for the unionized country and detrimental for its trading partner. Finally, we conduct an empirical analysis that provides strong support for the main hypotheses of our theoretical model.Résumé. Différences dans le degré de syndicalisation en tant que source d'avantage comparatif dans leséconomies ouvertes. Ce texte examine le cas de deuxéconomies nationales intégrées qui diffèrent seulement par leurs marchés du travail : l'une a des syndicats, alors que l'autre a des salaires qui résultent de la concurrence. Ces différences institutionnelles sont une source d'avantage comparatif qui a un impact sur le commerce interindustriel et sur le niveau de bien-être dans uneéconomie ouverte. Dans ce contexte, la désyndicalisation exerce des effets de bien-être opposés dans les deuxéconomies. Une concurrence accrue dans le marché du produit est bénéfique pour le pays syndiqué, et coûteuse pour son partenaire commercial. Une analyse empirique supporte les principaux résultats du modèle théorique.