(2005) Economic Integration, Market Power and Technological Change. IZA Discussion Paper No. 1592. IZA, Germany.

Posted on by Palokangas Tapio K

Abstract. We examine a common market which expands by integrating new regions. Capitalists are strategically
interdependent through the goods market and they improve their productivity through R&D. Production and R&D employ unionized workers. The purpose of integration is to maximize a weighed
average of workers’ and capitalists’ utilities. The main findings are as follows. Integration benefits capitalists more than workers. If labour unions are strong enough, then the common market
can expand indefinitely. Otherwise, there is a upper limit for integration. This is the higher, the higher producer market power or the stronger the capitalists’ political influence.

  • A paper presented in the Ninth International Conference on Dynamics, Growth, and International Trade (DEGIT), Reykjavik, Iceland, June 11-12, 2004. Homepage
  • A paper presented in IZA, Germany, September 7, 2004.
  • A paper presented in the international Europaeum workshop on “Factors, Goods, Externalities, Institutions, and Mobility in Europe and Beyond”, Bologna, Italy, September 30 – October 1, 2005.
  • A paper presented in the Tokyotech/IIASA Workshop in Laxenburg, Austria, September 8-9, 2007

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