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Employment protection and globalisation in dynamic oligopoly

Gerda Dewit, Dermot Leahy () and Catia Montagna

No 57, Royal Economic Society Annual Conference 2003 from Royal Economic Society

Abstract: We construct a model in which oligopolistic firms decide where to locate. Firms choose to locate either in a country where employment protection implies costly output adjustments or in one without adjustment costs. Using a two-period three-stage game with uncertainty it is demonstrated that location is influenced by both flexibility and strategic concerns. We show that the strategic effects under Cournot work towards domestic anchorage in the country with adjustment costs while those under Bertrand do not.Strategic agglomeration can occur in the inflexible country under Cournot and even under Bertrand provided uncertainty and foreign direct investment costs are low.

Keywords: uncertainty; flexibility; oligopoly; employment protection; foreign direct investment (search for similar items in EconPapers)
JEL-codes: D80 F23 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ifn
Date: 2003-06-04
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Related works:
Working Paper: Employment Protection and Globalization in Dynamic Oligopoly (2003) Downloads
Working Paper: Employment Protection and Globalisation in Dynamic Oligopoly (2003) Downloads
Working Paper: Employment protection and globalisation in dynamic oligopoly (2003) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ecj:ac2003:57

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