Vertical differentiation and labor market: the differentiation principle revisited

Amal Hili, Rim Lahmandi-Ayed and Hejer Lasram

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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: competition; labor market.; product market; vertical differentiation (search for similar items in EconPapers)
Date: 2015-03
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Citations: View citations in EconPapers (4)

Published in Economics Bulletin, 2015, 35 (1), pp.633--640

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