Abstract
This paper addresses the effects of product market integration on wages. We develop a two-country general equilibrium model of international trade with imperfectly competitive product markets and unionized labor markets. Integration is modelled as either a fall in fixed or variable trade costs. A reduction in fixed trade costs leads to an unambiguous decrease in wages, whereas a reduction in variable trade costs has an ambiguous effect on wages.
| Original language | English |
|---|---|
| Journal | Scandinavian Journal of Economics |
| Volume | 104 |
| Issue number | 2 |
| Pages (from-to) | 289-299 |
| Number of pages | 11 |
| ISSN | 0347-0520 |
| DOIs | |
| Publication status | Published - 2002 |
| Externally published | Yes |