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Vertical differentiation and labor market: the differentiation principle revisited

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.
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Submitted on : Monday, February 6, 2017 - 2:18:41 PM
Last modification on : Wednesday, August 5, 2020 - 3:14:50 AM

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Amal Hili, Rim Lahmandi-Ayed, Hejer Lasram. Vertical differentiation and labor market: the differentiation principle revisited. Economics Bulletin, Economics Bulletin, 2015, 35 (1), pp.633--640. ⟨hal-01457404⟩

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