At the turn of the millennium three frequently cited potential causes of new challenges for wage p olicy in Germany are revisited in this study: skilled-biased technological progress, the increasing international integration of labor and product markets, and the monetary integration of the EMU....

This paper provides an analysis of outsourcing and trade in a spatial model à la Hotelling. In this setting, we discuss the trade-off between transport-cost-related disadvantages and outsourcing-induced production cost advantages of a large economy. The model gives a rich picture of possible...

We consider the evolution of preferences when trade occurs between two countries. We show that if one country is much larger than the other, its preferences can eventually take over the preferences of the second country. This result may provide an explanation of why small countries sometimes...

Worker movements played a crucial role in making workplaces safer. Workplace safety is costly for firms but increases labour supply. A laissez-faire approach leaving safety of workplaces unknown is suboptimal. Safety standards set by better-informed trade unions are output and welfare...

We provide evidence indicating that countries with well-developed social security systems do not necessarily face a trade-off between social spending and competitiveness. On average, countries that spend a lot on social needs score well in the competitiveness league. We investigate the...

We show that, even with flexible domestic wages, international outsourcing may worsen the welfare of the home country and reduce the profits of all firms. If wages are rigid, outsourcing is welfare-improving if and only if the sum of the “trade creation” effect and the “exploitation...

We use a simple framework where firms in two countries serve their respective domestic markets and a world market to analyze under which conditions cost-reducing mergers will be beneficial for the merging firms, the home country, and the world as a whole. For a national merger, the policies...

We analyze the role of imitation and innovation in promoting technological progress in new members of European Union: the Czech Republic, Hungary, Poland and Slovakia. The two modes of technological development—innovation and imitation—are distinguished from one another by identifying the...

This paper examines how trade liberalization affects the innovation incentives of firms, and what this implies for industry productivity. For this purpose we develop a reciprocal dumping model of international trade with heterogeneous firms and endogenous R&D. Among the robust results that hold...

This paper looks at a model in which two countries trade agricultural and manufactured commodities. The manufactured-goods sector produces with increasing returns to scale under conditions of monopolistic competition. It is shown that an increase in land endowment (or an increase in agricultural...