Vertical differentiation and labor market: the differentiation principle revisited

Amal Hili (), Rim Lahmandi-Ayed and Hejer Lasram
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Amal Hili: ISG-Sousse, Unité MASE-ESSAI and EPEE-Evry

Economics Bulletin, 2015, vol. 35, issue 1, 633-640

Abstract: 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.

Keywords: Vertical differentiation; competition; product market; labor market. (search for similar items in EconPapers)
JEL-codes: J4 L1 (search for similar items in EconPapers)
Date: 2015-03-22
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Citations: View citations in EconPapers (4)

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