Skip to main content
Article thumbnail
Location of Repository

Foreign direct investment and wage bargaining

By Robin Naylor and Michele Santoni


We derive the sub-game perfect Nash equilibria for the foreign direct investment (FDI) game played between two unionised firms. Among other results, we show that FDI is less likely, ceteris paribus, the greater is union bargaining power, the stronger the weight the union attaches to wages, and the more substitutable are firms’ products in the potential host country. We derive results concerning the conditions under which FDI will be reciprocal. We also examine conditions under which the FDI game between firms will possess the characteristics of a Prisoners’ Dilemma. Finally, we consider the possibility that firms might delegate wage determination to unions as a method of strategic deterrence against entry by FDI

Topics: HG, HD
Publisher: University of Warwick. Centre for the Study of Globalisation and Regionalisation
Year: 1999
OAI identifier:

Suggested articles


  1. (1986). ( ) ( ) D x x x x x x p E TR x x p E d
  2. (1996). Are Nash bargaining wage arrangements unique? An investigation to bargaining sets for firm-union negotiation’, doi
  3. (1994). Beyond capitalism: towards a new economic order, doi
  4. (1986). Comparative statics for oligopoly’, doi
  5. (1995). Cross-hauling direct foreign investment and unionised oligopoly’, doi
  6. (1991). Employment outlook, doi
  7. (1997). Foreign direct investment, technological change, and economic growth within doi
  8. (1991). Game theory, doi
  9. (1982). Generalised oligopoly derived demand with an application to tax induced entry’, doi
  10. (1998). Industrial relations systems and US foreign direct investment abroad’, doi
  11. (1984). Investment and wages in the absence of binding contracts: a Nash bargaining approach’, doi
  12. (1985). log e e dlog x1B is Seade’s
  13. (1996). OECD reviews of foreign direct investment: France, doi
  14. (1984). Price and quantity competition in a differentiated duopoly’, doi
  15. (1985). Profitable cost increases and the shifting of taxation’,
  16. (1993). Sectoral dimension’, in ‘Market services and European integration’,
  17. (1995). Strategic direct investment under unionised oligopoly’, doi
  18. (1987). Strategic investment and the development of multinationals’, doi
  19. (1987). Strategic investment, multinational corporation and trade policy’, doi
  20. (1986). The economics of intra-industry trade, doi
  21. (1995). The effects of unions on investment and innovation decisions, theory and empirical evidence, Phd Thesis,
  22. (1997). The European internal market programme and inbound foreign direct investment: part I’, doi
  23. (1997). The European internal market programme and inbound foreign direct investment: part II’, doi
  24. (1998). The impact of foreign direct investment on wages and employment’, doi
  25. (1992). The Nissan Enigma: flexibility at work in a local economy, doi
  26. (1996). Trade and foreign direct investment specialisation effects of the single market programme’,
  27. (1989). Union oligopoly bargaining’, doi
  28. (1996). Wage bargaining in industries with market power’, doi
  29. (1968). Wage rates as a barrier to entry: the Pennington case in perspective’, doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.