Product Market Competition, Labor Mobility, and Firm-Sponsored Training: New Implications of Market Power

Arghya Ghosh, Morita Hodaka and Susumu Sato

No 2025-04, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: Firms compete in both product and labor markets by making decisions about hiring, training, and poaching workers. We develop a theoretical model in which firm-sponsored training links product and labor market competition. Changes in labor, product, or overall market power influence firms' incentives to invest in training, which can lead to clear-cut welfare improvements benefiting all relevant parties. The distinction between under- vs. overinvestment in training, a unique feature that emerges from the interaction between the two markets, plays a critical role in determining whether or not such welfare improvements are possible, enriching welfare and policy implications.

Keywords: product market competition; oligopoly; market power; labor mobility; training; welfare; antitrust implications (search for similar items in EconPapers)
JEL-codes: D21 L13 L40 M50 (search for similar items in EconPapers)
Pages: 85 pages
Date: 2026-03
New Economics Papers: this item is included in nep-com and nep-mic
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