Foreign direct investment and wage bargaining

Robin Andrew Naylor () and Michele Santoni ()

Journal of International Trade & Economic Development, 2003, vol. 12, issue 1, pages 1-18

Abstract: We derive the sub-game perfect Nash equilibria for the foreign direct investment (FDI) game played between two unionized firms. We show that FDI is less likely, ceteris paribus, the greater is union bargaining power and the more substitutable are the firms' products in the potential host country. We also examine the conditions under which the FDI game between firms will possess the characteristics of a Prisoners' Dilemma.

Keywords: Foreign Direct Investment; Oligopoly; Wage Bargaining (search for similar items in EconPapers)
Date: 2003
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Working Paper: Foreign direct investment and wage bargaining (1999)
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