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| Author: | Buccella, D. |
| Title: | Unions and the coordination problem in an integrated economy |
| Journal: | Baltic journal of economics
2007 : SUMMER/AUTUMN, VOL. 7:1, p. 19-33 |
| Index terms: | technological change trade unions co-operation international production integration models |
| Language: | eng |
| Abstract: | This study represents an extension of the model presented by O. Blanchard (in the L. Robbins' Lectures (2000) at the M.I.T.) The transnational cooperative behaviour of trade unions is analyzed in a two symmetric country-model with monopolistic competition firms present in the two markets under the possibility to shift production. In the case of technological shocks, firms can capture the advantage in wage differentials btw. the 2 countries. The country facing the shock has a loss in employment, while the other one faces a gain. But, if trade unions cooperate, in absence of transaction costs (here as: tr-costs), they can reduce the total loss of employment. If tr-costs are present, unions face a classical Prisoner's Dilemma where the Nash equilibrium of the game is no cooperation, but this result is not Pareto-efficient. |
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