27 July 2016
This article examines economic integration in a general partially oligopolistic equilibrium model where the government determines the oligopolists’ wages, either directly, or indirectly through regulating labor union power. It is proven that both capital market integration and a switch from national to international labor market regulation increases aggregate welfare, but have different effects on individual utilities. Capital market integration decreases the oligopolists’ wages, wage inequality between the oligopolistic and competitive sectors and the workers’ total welfare, but international labor market regulation increases the capitalists’ welfare, while international labor market regulation does vice versa.
Last edited: 07 August 2016
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