Abstract
We analyze the consequences of product market integration in a simple two-country, two-sector, general-equilibrium model with imperfect competition due to economies of scale. In contrast to the existing literature we take explicit account of the labor-market structures in the integrating economies. It turns out that the specific labor-market structures are very important for how integration affects total production and product market structure in a particular economy. However, integration always gives rise to a welfare gain in both economies.
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I have benefitted from comments by an anonymous referee, a coeditor of this journal, and by participants in a workshop arranged by CIE in April 1992, at the University of Aarhus, and by participants at the EEA conference in Dublin 1992.
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Sørensen, J.R. Market integration and imperfect competition in labor and product markets. Open Econ Rev 5, 115–130 (1994). https://doi.org/10.1007/BF01000747
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DOI: https://doi.org/10.1007/BF01000747