Economic Integration, Lobbying by Firms and Workers, and Technological Change
Abstract
I examine a common market with the following institutions. Oligopolistic /rms improve their productivity by R&D. Wages are determined by union-employer bargaining. Firms and workers lobby the authority that accepts new members and regulates unions' and /rms' market power. The main /ndings are as follows. Small common markets have incentives to expand, but large ones are indi.erent to new members. With product market deregulation, there is an upper limit for the size of the common market and the growth rate diminishes with integration.