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This research examines the interaction of (de)unionization and trade liberalization in shaping firm productivity, market structure, trade flows, unemployment, and functional distribution (changes in the wage difference and labor income share). It introduces unemployment to the Melitz‐Ottaviano model by considering unionism in the differentiated manufacturing sector and searching frictions in the homogeneous service sector. It shows that unionization has a selection‐softening effect, leading to a non‐monotonic relationship between unionization and the number of firms and unemployment. With international trade, a unilateral increase in the degree of unionization in one country gives rise to a selection‐softening effect for domestic‐only firms and a selection‐toughening effect for exporting firms in this country, resulting in unemployment being more likely to increase relative to autarky. If openness to trade is relatively low (high), then the average wage difference for this country compared to its trading partner country rises (declines). Trade liberalization does not necessarily reduce unemployment, and depends on the relative degree of unionization between the two trading countries. In sharp contrast to the conventional notion, de‐unionization can increase, rather than decrease, the labor income share of unionized workers, provided that openness to trade is sufficiently high. [ABSTRACT FROM AUTHOR]

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jet.2005.06.005 Byline: Shin-Kun Peng (a), Jacques-Francois Thisse (b), Ping Wang (c) Abstract: We examine the interactions between economic integration and employment agglomeration in a neoclassical-growth, middle-product economy. There are two vertically integrated economies, with competitive final good firms operating plants in both regions and monopolistically-competitive intermediate good firms operating each in only one region. Immobile workers are employed with traded middle products to produce the nontraded final good; mobile workers are used with immobile capital to design and produce differentiated intermediate good inputs. While agglomeration and growth need not be positively related, trade need not enhance regional growth nor widen the skilled-unskilled wage gap. Author Affiliation: (a) Academia Sinica and National Taiwan University, Taiwan (b) CORE, Universite Catholique de Louvain and CEPR, Belgium (c) Washington University in St. Louis and NBER, USA Article History: Received 18 May 2004; Revised 30 June 2005

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.regsciurbeco.2005.06.006 Byline: Marcus Berliant (a), Shin-Kun Peng (b), Ping Wang (c) Keywords: Congestible local public goods; Optimal public facility configurations Abstract: We develop a model with a finite number of households and congestible local public goods where the level of provision, the number of facilities and their locations are all endogenously determined. We prove that an equal-treatment identical-provision second-best optimum exists, where all households are required to reach the same utility level, the provision of local public good is required to be the same at all facilities, and all facilities must serve the same number of consumers. Such an optimal public facility configuration may be concentrated (single site) or dispersed (multiple sites), depending on congestability, commuting cost and household preference parameters. Author Affiliation: (a) Department of Economics, Washington University, St. Louis, MO 63130-4899, USA (b) Academia Sinica and National Taiwan University, Taipei, Taiwan, ROC (c) Vanderbilt University and NBER, Nashville, TN, USA

Most theoretical work on the behavior of spatial monopoly focuses on the single-product case, while, in reality, a firm usually produces (or sells) many differentiated products. In this paper, I introduce a new model of spatial monopoly with a multiple-product firm where the firm chooses both the measure of product varieties and the price of each variety to maximize its profit. I also examine the monopolist's optimal decision and its economic effects on the spatial economy with a fixed and variable market fringe, respectively. For a class of preferences to product differentiation, I find that both the quantities produced and the consumer surpluses vary across three different spatial pricing policies. This finding is in contrast to the literature on a single-product spatial monopoly where those results are invariant across different pricing policies., 1. Introduction In the literature on spatial monopoly, it is common to assume that the firm produced (or sold) only one good. This assumption, however, departs from the real world. [...]

Modeling location-dependent interfirm production externalities in a general-equilibrium linear-city framework, the crucial role of uncompensated knowledge spillovers for agglomeration is investigated. The populations of firms, transportation cost, and firm-interaction parameters affect location distribution of equilibrium urban configuration.

This paper provides the implications of firm heterogeneity for the environment. In autarky, raising emission tax generates an average productivity gain and favors efficient firms in the sense that their output expands. Although some of these efficient firms discharge more emissions, some may discharge less. While trade liberalization raises outputs, global emissions do not necessarily increase. A unilateral increase in emission tax not only decreases the outputs in this country but also decreases its average productivity under sufficiently high trade openness. Trade liberalization reduces global emissions under tax harmonization but it may generate more global emissions under tax competition. [ABSTRACT FROM AUTHOR]

This paper examines the tax competition for mobile capital between two symmetric countries in a monopolistic competition economy. Taxation generates its own distortions of location and consumption as long as consumers/governments deviate from the symmetric equilibrium. Taking all possible distortions into account, this paper finds that the equilibrium tax rate may be positive and increasing when trade costs are high while it is negative and decreasing when trade costs are low if consumers have additively separable preferences displaying an increasing relative love for variety. This nonmonotonic relationship of tax rate with trade costs is further accompanied by welfare loss when market integration starts. The procompetitive effect and the income effect are both crucial to deriving the results. [ABSTRACT FROM AUTHOR]

By specifying the setting of the footloose capital model with firm heterogeneity, this paper examines the effects of trade liberalization on unemployment through two different mechanisms: firstly, we embed search frictions into the labor market; and secondly, we consider fair wages as the source of unemployment. In the model with search frictions, we find that both the expected wage and employment rate could be higher for a small country with better search technology. In the fair wage setting, the results show that an increase in trade freeness increases the unemployment rate of the large (small) country when the trade freeness is sufficiently high (low). Finally, we try to compare the welfare levels under different scenarios and discover that unemployment may lead to a deterioration in the welfare gains from trade. [ABSTRACT FROM AUTHOR]

The roles and responsibilities of cities in CO2mitigation have drawn increasing attention in recent years. To facilitate optimal design of effective mitigation policies, it is important for city authorities to understand the magnitudes and sources of their CO2emissions, and their relative shares of emissions at a higher spatial level. Although several studies estimate CO2emissions at the city level, the robustness of these estimates and their linkage to emissions at a higher level remains unclear. This kind of localized information on emissions is important for coordination of climate policies at different spatial scales. The study aims to fill a gap in understanding by building a systematic bottom-up approach for estimating urban CO2emissions and offering a consistency check with IPCC top–down estimates. Using Taiwan as a case study, we display the geographic distribution of CO2emissions. The significance and implications of the downscaling CO2emissions are indicated accordingly. [ABSTRACT FROM AUTHOR]