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Scarce human resources and equilibrium industry structure

Huasheng Song, Ruqu Wang () and Jianliang Ye ()
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Ruqu Wang: Zhejiang University
Jianliang Ye: Zhejiang University

Journal of Economics, 2018, vol. 124, issue 2, 99-119

Abstract: Abstract We investigate how the initial distribution of scarce human resources determines the equilibrium industry structure. Using a two-firm competition model with resource-dependent production technology, we examine the flow of these resources in gradual trading, one-off trading, and Walrasian trading. We find that the evolution of an industry’s structure depends on the total amount of resources available relative to the market size. When resources are plentiful, a symmetric duopoly emerges through the trading of the resources. In all three models, a monopoly emerges when the resources are sufficiently scarce. This is in contrast to the results obtained by many existing models of capacity found in the literature.

Keywords: Industry structure; Scarce durable resources; Human resources; Airlines; Pilots; L11; L13; D43; D62 (search for similar items in EconPapers)
Date: 2018
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