 Exports versus export-platform FDI with endogenous wage determinationKi-Dong Lee and Woohyung Lee Economic Modelling, 2016, vol. 54, issue C, 479-489 Abstract: In this paper, we explain why unionized MNFs in the same industry choose different entry modes between export and export-platform FDI when serving the same market. The platform-type FDI becomes more likely, ceteris paribus, with higher wage-oriented behavior by the unions, deeper trade liberalization in the host country, and lower fixed costs incurred in the FDI. Some of our results are counter-intuitive. It is particularly shown that a non-unionized MNF undertakes FDI whereas a unionized MNF remains in the domestic country even in the absence of productivity differences between the firms. Under certain conditions, trade liberalization in the host country might cause a complete reversal in the location pattern between unionized and non-unionized firms. Moreover, FDI induced by trade liberalization might hurt the domestic economy as a whole due to the loss of union rents and rival firms' profits, which provides a rationale for the use of lump-sum production subsidies as a government policy. Keywords: Fixed cost; Export-platform FDI; Labor union; Plant location; Trade liberalization (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:54:y:2016:i:c:p:479-489 DOI: 10.1016/j.econmod.2016.01.016 Access Statistics for this article Economic Modelling is currently edited by S. Hall and P. Pauly More articles in Economic Modelling from Elsevier |
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