Vertically differentiated goods and labour markets. A note on quality, quantity and welfare

Alessandro Turrini

No 1997056, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: In a vertically differentiated oligopoly where the high quality variant of the good requires the use of the high quality labour (available in¯fixed supply) ¯firms may either all supply the same quality or di®erentiate their product. Only di®erentiated outcomes can be optimal, but the number of ¯rms choosing the high quality variant is generally above the optimal number.

Keywords: Quality competition; product differentiation; strategic effects; cost externalities (search for similar items in EconPapers)
JEL-codes: D4 J24 L13 L15 (search for similar items in EconPapers)
Date: 1997-08-01
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