Wages and productivity growth in a dynamic oligopoly

Helmut Bester, Chrysovalantou Milliou and Emmanuel Petrakis

No 2009/18, Discussion Papers from Free University Berlin, School of Business & Economics

Abstract: This paper studies the innovation dynamics of an oligopolistic industry. The firms compete not only in the output market but also by engaging in productivity enhancing innovations to reduce labor costs. Rent sharing may generate productivity dependent wage differentials. Productivity growth creates intertemporal spill-over effects, which affect the incentives for innovation at subsequent dates. Over time the industry equilibrium approaches a steady state. The paper characterizes the evolution of the industry's innovation behavior and its market structure on the adjustment path.

Keywords: innovation; labor productivity; oligopoly; wage differentials; productivity growth; industry dynamics (search for similar items in EconPapers)
JEL-codes: D24 D42 D92 J31 (search for similar items in EconPapers)
Date: 2009
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Related works:
Working Paper: Wages and Productivity Growth in a Dynamic Oligopoly (2009)
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