Economic Integration, Imperfect Competition, and International Policy Coordination

Bertil Holmlund and Ann-Sofie Kolm ()

No 1999:7, Working Paper Series from Uppsala University, Department of Economics

Abstract: The paper examines policy externalities between imperfectly competitive open economies where unemployment prevails in general equilibrium. We develop a two-country and two-sector model with monopolistic competition in the goods market and wage bargaining in the labor market. Policy externalities operate through the real exchange rate and economic integration is modeled as a reduction in trade costs. We explore how market integration influences policy spillovers, employment and real wages. We also examine how national and supranational commodity tax policies affect sectoral and total employment. Finally, we characterize optimal commodity taxes with non-cooperative and cooperative policies and offer some rough estimates of the welfare gains from policy coordination, using a calibrated version of the model.

Keywords: Economic integration; imperfect competition; wage determination; policy cooperation (search for similar items in EconPapers)
JEL-codes: D43 E61 F15 J23 J64 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cdm, nep-mic and nep-pub
Date: 1999-04-22
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Published in Oxford Economic Papers, 2002, pages 207-229.

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http://www.nek.uu.se/faculty/holmlund/INTEGR_Rev-final_01.pdf Revised version. (application/pdf)
http://www.nek.uu.se/pdf/1999wp7.pdf Original version. (application/pdf)

Related works:
Working Paper: Economic Integration, Imperfect Competition, and International Policy Coordination (1999)
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Persistent link: http://EconPapers.repec.org/RePEc:hhs:uunewp:1999_007

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