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Labour Pooling, Labour Poaching and Spatial Clustering

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Author Info
Combes, Pierre-Philippe
Duranton, Gilles

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Abstract

When firms cluster in the same local labour market, they face a trade-off between the benefits of labour pooling (i.e., access to workers whose knowledge helps reduce costs) and the costs of labour poaching (i.e., loss of some key workers to competition and the indirect effect of a higher wage bill to retain the others). We explore this trade-off in a duopoly game. Depending on market size and on the degree of horizontal differentiation between products, we characterize the strategic choices of firms regarding locations, wages, poaching and prices. Our results show that co-location, although it is always efficient, is not in general the equilibrium outcome.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2975.

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Date of creation: Sep 2001
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Handle: RePEc:cpr:ceprdp:2975

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Related research
Keywords: agglomeration; firm clustering; labour poaching; labour pooling;

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Find related papers by JEL classification:
J60 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - General
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
R32 - Urban, Rural, and Regional Economics - - Production Analysis and Firm Location - - - Other Production and Pricing Analysis

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  15. Jarle Møen, 2000. "Is Mobility of Technical Personnel a Source of R&D Spillovers?," NBER Working Papers 7834, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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