Abstract
This paper analyses the wage demands of a sector-level monopoly union facing internationally mobile rms. A simple two-country economic geography model is used to describe how rms relocate in function of international dierences in production costs and market size. The union sets wages in function of the rm level labour demand elasticity and the responsiveness of rms to relocate internationally. If countries are suciently symmetric lower foreign wages and lower trade costs necessarily lead to lower union wage demands. With asymmetric countries these intuitive properties do not always hold. But even for symmetric countries it holds that small increases in market size or trade costs makes union wages more sensitive to the foreign wage level.
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