Differentiation, labor market and globalization

Amal Hili, Rim Lahmandi-Ayed and Hejer Lasram
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Amal Hili: EPEE - Centre d'Etudes des Politiques Economiques - UEVE - Université d'Évry-Val-d'Essonne
Hejer Lasram: GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

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Abstract: We consider two countries with initially one firm in each country and the possibility for each firm to invest in the other country or commercialize its products, and for workers to immigrate (Common Labor Market; CLM). Interestingly, when firms compete on the product market with no competition on the labor market (Goods' Mobility; GM), they do not differentiate their qualities. However, when competition is introduced in both markets (Foreign Investment; FI) firms differentiate their products. We compare the globalization scenarii and prove that they improve the global social welfare relative to autarky and that a cooperative choice by countries of a globalization scenario would lead to GM. © 2016 Taylor & Francis.

Keywords: common labor market; foreign investment; globalization; goods’ mobility; labor market; Vertical differentiation (search for similar items in EconPapers)
Date: 2016-02
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Citations: View citations in EconPapers (6)

Published in Journal of International Trade and Economic Development, 2016, 25 (6), pp.809--833. ⟨10.1080/09638199.2015.1136832⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02877960

DOI: 10.1080/09638199.2015.1136832

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