Lommerud, Kjell Erik; Meland, Frode; Lars S¯rgard - In: Economic Journal 113 (2003) 490, pp. 782-800
In a two-country reciprocal dumping model, with one country unionised, we analyse how wage setting and firm location are influenced by trade liberalisation. We show that trade liberalisation can induce FDI, which is at odds with conventional theoretical wisdom and cannot happen in a...