DP3323 Firms Agglomeration and Unions
|Author(s):||Pierre M Picard, Eric Toulemonde|
|Publication Date:||April 2002|
|Keyword(s):||agglomeration, monopolistic competition, unions|
|JEL(s):||F12, F15, J51, R12|
|Programme Areas:||International Trade and Regional Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=3323|
This Paper develops a model in which the interaction between product market imperfections, transportation costs, unions and workers immobility across regions creates a tendency for agglomeration of firms when transportation costs are low. The model fits quite well the European experience. It is able to explain the emergence of a centre-periphery pattern with equally populated regions. In the centre, most people work in the unionized industry and earn large wages. In contrast, workers in the periphery are employed at a low wage in a constant return to scale industry.