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Trade, FDI and Unions
註釋Studies the location behaviour of a foreign firm and a home firm competing in output in the domestic product market. Both firms produce a homogenous good using a labour intensive technology. While the domestic country is unionized, the foreign country is not. Finds that when foreign wage levels are relatively low, both firms agglomerate in the foreign market (North-South FDI) and the optimal government intervention by the North is a zero tariff on imports from the South. For intermediate wage levels abroad, both firms prefer to locate in their own market and the optimal domestic government intervention is a positive tariff on foreign imports. For relatively high foreign wage levels, the optimal tariff policy is such that both firms agglomerate in the domestic country (North-North FDI).