Leahy, Dermot
(2005)
Union Legislation and Export
Platform FDI.
Journal of International Trade and Economic Development, 14 (4).
pp. 437-452.
ISSN 0963-8199
Abstract
This paper examines Foreign Direct Investment in the presence of labour
unions. An oligopoly model is developed in which identical firms locate in a host country
in order to export to a foreign country. These firms are unionized and compete with
foreign firms on the foreign market. We consider the incentives for social dumping via
restrictive labour legislation, which we assume can be used by the host country
government to affect the bargaining power of unions. We ask whether it is in the interest
of the importing foreign country for the host country to relax or to tighten labour laws.
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