Wage competition with international capital mobility

Oliver Lorz

No 799, Kiel Working Papers from Kiel Institute for the World Economy

Abstract: This paper analyzes wage competition between national trade unions caused by the international mobility of capital. Perfect capital mobility leads to a Bertrand result for the outcome of wage competition: A pure strategy equilibrium implies full employment in all countries. It is shown that such an equilibrium exists for a sufficiently large number of countries. As extensions of the basic model, decreasing returns to scale and capital adjustment costs are introduced.

Keywords: capital mobility; trade unions (search for similar items in EconPapers)
JEL-codes: F2 J5 (search for similar items in EconPapers)
Date: 1997
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:799

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