[Publisher:] Institut für Weltwirtschaft (IfW) [Place:] Kiel [Year:] 1997
Kiel Working Paper 799
This paper analyzes wage competition between national trade unions caused by the international mobility of capital. Perfect capital mobility leads to a Bertrand result for the outcome of wage competition: A pure strategy equilibrium implies full employment in all countries. It is shown that such an equilibrium exists for a sufficiently large number of countries. As extensions of the basic model, decreasing returns to scale and capital adjustment costs are introduced.