Vertical differentiation and labor market: the differentiation principle revisited

The labor market is introduced into the standard vertical differentiation model, linking increasingly the quality of the product and the effort necessary for workers to produce it. Surprisingly, when two firms compete on the product market but are monopolies on the labor market, at equilibrium they choose not to differentiate their products, which is different from the result obtained with standard vertical differentiation models.

MoreLess

Year of publication:	2015-03-22
Authors:	Hili, Amal ; Lahmandi-Ayed, Rim ; Lasram, Hejer
Published in:	Economics Bulletin. - AccessEcon, ISSN 1545-2921. - Vol. 35.2015, 1, p. 633-640
Publisher:	AccessEcon
Subject:	Vertical differentiation \| competition \| product market \| labor market

More details

Extent:	application/pdf
Type of publication:	Article
Classification:	L1 - Market Structure, Firm Strategy, and Market Performance ; J4 - Particular Labor Markets
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10011207122