Employment protection and globalisation in dynamic oligopoly

Gerda Dewit, Dermot Leahy, Catia Montagna

    Research output: Working paperDiscussion paper

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    Abstract

    We construct a model in which oligopolistic firms decide where to locate. Firms choose to locate either in a country where employment protection implies costly output adjustments or in one without adjustment costs. Using a two-period three-stage game with uncertainty it is demonstrated that location is influenced by both flexibility and strategic concerns. We show that the strategic effects under Cournot work towards domestic anchorage in the country with adjustment costs 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.
    Original languageEnglish
    PublisherUniversity of Dundee
    Publication statusPublished - 2003

    Publication series

    NameDundee Discussion Papers in Economics
    PublisherUniversity of Dundee
    No.137
    ISSN (Print)1473-236X

    Keywords

    • Uncertainty
    • Flexibility
    • Oligopoly
    • Employment protection
    • Foreign direct investment
    • Location

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  • Cite this

    Dewit, G., Leahy, D., & Montagna, C. (2003). Employment protection and globalisation in dynamic oligopoly. (Dundee Discussion Papers in Economics; No. 137). University of Dundee.