Does product market competition improve the labour market performance ?
AbstractIn this paper, I construct a general equilibrium model in which the labour market exhibits search frictions, whereas Cournot competition is assumed in the goods market. The properties of the long run free-entry equiibrium show that a more competitive product market raises employment, but it has ambiguous effects both on the real wage and on the utility of the employees. Moreover, from a normative viewpoint, the level of employment and the degree of competition may be inefficiently high. Numerical results based on Belgian data are finally performed.
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Bibliographic InfoPaper provided by Université catholique de Louvain, Département des Sciences Economiques in its series Discussion Papers (ECON - Département des Sciences Economiques) with number 2008007.
Date of creation: 01 Feb 2008
Date of revision:
product market competition; search matching equilibrium; barriers to entry;
Find related papers by JEL classification:
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
- L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-03-15 (All new papers)
- NEP-BEC-2008-03-15 (Business Economics)
- NEP-COM-2008-03-15 (Industrial Competition)
- NEP-DGE-2008-03-15 (Dynamic General Equilibrium)
- NEP-LAB-2008-03-15 (Labour Economics)
- NEP-MAC-2008-03-15 (Macroeconomics)
- NEP-MIC-2008-03-15 (Microeconomics)
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