Discussion paper

DP3323 Firms Agglomeration and Unions

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.

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Citation

picard, p and E Toulemonde (2002), ‘DP3323 Firms Agglomeration and Unions‘, CEPR Discussion Paper No. 3323. CEPR Press, Paris & London. https://cepr.org/publications/dp3323