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 corresponding model without unionisation. FDI is undertaken partly to win a distributional battle with unionised labour and the incentives to invest abroad can be too large seen from a welfare point of view.

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We analyze how the presence of trade unions affects the pattern of mergers in an international oligopoly and the welfare implications thereof. We find that wages for the merger participants are always lower when they merge internationally, rather than nationally. Using a model of endogenous merger formation, we find that the firms will merge internationally in equilibrium. There are more international mergers than socially preferred, unless products are close substitutes. A “national champion” policy of promoting domestic mergers rather than international ones is nevertheless never optimal.

This paper studies the interplay between public and private health care in a National Health Service. We consider a two-stage game, where at stage one a Health Authority sets the public sector wage and a subsidy to (or tax on) private provision. At stage two the physicians decide how much to work in the public and the private sector. We characterise di¤erent equilibria depending on whether physicians coordinate labour supply or not, the physicians' job preferences, and the cost e¢ciency of private relative to public provision. We …nd that private provision tends to crowd out the NHS if physicians are su¢ciently indi¤erent about where to work or the private sector is su¢ciently cost e¢cient. Competition between physicians triggers a shift from public provision towards private provision, and an increase in the total amount of health care provided. The endogenous nature of labour supply may have counter-intuitive e¤ects. For example, a cost reduction in the private sector is followed by a higher wage in the public sector.JEL Classi…cation: I11, I18, J42, L33

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