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Employment Protection And Product Market Competition

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  • Sebastian Kessing

Abstract

A firm facing employment protection will defend its market position more fiercely than a firm operating without such restrictions. However, ex ante it will be more reluctant to expand its market position. For the benchmark case of contest competition, the defensive effect dominates. A firm facing employment protection has a stronger average market position. -- Ein Unternehmen, das Kündigungsschutzbestimmungen ausgesetzt ist, verteidigt seine Marktposition stärker als ein konkurrierendes Unternehmen, das ohne derartige Restriktion agiert. Ex ante wird es jedoch vorsichtiger sein, seine Marktposition auszudehnen, da es die potentiellen Kosten im Falle einer späteren Verschlechterung der eigenen Marktposition vermeiden möchte. Für den Benchmarkfall, in dem der Wettbewerb zwischen den Unternehmen die Form eines Contests annimmt, überwiegt der defensive Effekt: Ein Unternehmen, das Kündigungsschutzbestimmungen ausgesetzt ist, hat langfristig eine stärkere Position im Markt als ein Wettbewerber der frei von solchen Restriktionen agiert.

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Bibliographic Info

Paper provided by Royal Economic Society in its series Royal Economic Society Annual Conference 2004 with number 50.

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Date of creation: 17 Sep 2004
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Handle: RePEc:ecj:ac2004:50

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  1. Saint-Paul, Gilles, 1996. "Employment Protection, International Specialization, and Innovation," CEPR Discussion Papers 1338, C.E.P.R. Discussion Papers.
  2. Glazer, A. & Kanniainen, V., 2000. "The Effects of Employment Protection on the Choice of Risky Projects," University of Helsinki, Department of Economics 487, Department of Economics.
  3. Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
  4. Konrad, Kai A, 2001. "Repeated Expropriation Contests and Foreign Direct Investment," CEPR Discussion Papers 2695, C.E.P.R. Discussion Papers.
  5. Koeniger, Winfried, 2002. "Employment Protection, Product Market Competition and Growth," IZA Discussion Papers 554, Institute for the Study of Labor (IZA).
  6. Stergios Skaperdas, 1996. "Contest success functions (*)," Economic Theory, Springer, vol. 7(2), pages 283-290.
  7. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-98, December.
  8. Stergios Skaperdas & Constantinos Syropoulos, 2002. "Insecure Property and the Efficiency of Exchange," Economic Journal, Royal Economic Society, vol. 112(476), pages 133-146, January.
  9. Belot, M.V.K. & Boone, J. & Ours, J.C. van, 2002. "Welfare Effects of Employment Protection," Discussion Paper 2002-48, Tilburg University, Center for Economic Research.
  10. Giulio Fella, 2000. "Investment in General Training with Consensual Layoffs," Working Papers 418, Queen Mary, University of London, School of Economics and Finance.
  11. Konrad, Kai A., 2000. "Trade contests," Journal of International Economics, Elsevier, vol. 51(2), pages 317-334, August.
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Cited by:
  1. Fritz Helmedag, 2005. "Möglichkeiten und Grenzen eines Beschäftigunspaktes," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 225(2), pages 151-162, March.
  2. Kjell Erik Lommerud & Odd Rune Straume, 2007. "Technology resistance and globalisation with trade unions: the choice between employment protection and flexicurity," NIPE Working Papers 25/2007, NIPE - Universidade do Minho.
  3. Kjell Erik Lommerud & Odd Rune Straume, 2008. "Employment Protection versus Flexicurity: On Technology Adoption in Unionised Firms," CESifo Working Paper Series 2472, CESifo Group Munich.
  4. Haaland, Jan I. & Wooton, Ian, 2003. "Domestic Labour Markets and Foreign Direct Investment," CEPR Discussion Papers 3989, C.E.P.R. Discussion Papers.
  5. Koeniger, Winfried, 2005. "Dismissal costs and innovation," Economics Letters, Elsevier, vol. 88(1), pages 79-84, July.

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