economic cooperation is discussed. The costs and benefits of adapting to a country’s culture are studied in Section 3. The analytical core of the paper is Section 4. In this section, the Akerlof-Kranton (2000) identity game is applied to immigration. Starting with the decision to migrate, a sequential game between a representative migrant and a representative citizen in the destination country is modeled and solved. The policy implications of the cultural identity game are studied in Section 5. Section 6 concludes.
2 The economic relevance of culture and cultural
The present work analyzes the effects of goods and capital market integration on welfare. In an imperfectly competitive industry with unionized labor, openness to competition via exports, the possibility of holding minority stakes into a rival company and undertaking Greenfield Foreign Direct Investment (FDI) exemplify product and capital market liberalization, respectively. Challenging the “lieu commune” that liberalization a priori improves the social welfare of an economy, making use of a game-theoretic approach, it is shown that a domestic government should design the appropriate interventions in product and capital markets depending on the precise pattern of economic integration.
Alexander Hijzen, Pedro S. Martins and Jante Parlevliet
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In many countries with national or sectoral bargaining, decentralisation has been “the name of the game in industrial relations” ( Visser, 2013b ). Decentralisation refers to the creation of more space for negotiations over working conditions at the level of the firm
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