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    Employment Protection, Flexibility and Firms’ Strategic Location Decisions under Uncertainty


    Dewit, Gerda and Leahy, Dermot and Montagna, Catia (2013) Employment Protection, Flexibility and Firms’ Strategic Location Decisions under Uncertainty. Economica, 80. pp. 441-474. ISSN 0013-0427

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    Abstract

    We construct a model in which oligopolistic firms decide between locating in a country where employment protection implies costly output adjustments and in one without employment protection. Using a two-period three-stage game with uncertainty, we demonstrate that location is influenced by both flexibility and strategic concerns. The strategic effects under Cournot work towards domestic anchorage in the country with employment protection while those under Bertrand do not. Strategic agglomeration can occur in the inflexible country under Cournot and even under Bertrand, provided uncertainty and foreign direct investment costs are low.

    Item Type: Article
    Additional Information: Preprint version of published article which is available at Dewit, G., Leahy, D. and Montagna, C. (2013) 'Employment Protection, Flexibility and Firms' Strategic Location Decisions under Uncertainty'. ECONOMICA, 80:441 - 474. This preprint is a SIRE Discussion Paper SIRE-DP-2012-24, published by the Scotting Institute for Research in Economics (2012).
    Keywords: Employment Protection; Flexibility; Foreign Direct Investment; Location; Strategic Behaviour; Uncertainty;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 4857
    Identification Number: https://doi.org/10.1111/ecca.12006
    Depositing User: Gerda Dewit
    Date Deposited: 02 Apr 2014 13:29
    Journal or Publication Title: Economica
    Publisher: Wiley
    Refereed: No
    URI:

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