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Wage bargaining and quality competition

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  • Bhattacharyya, Ranajoy
  • Saha, Bibhas
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    Abstract

    In a standard model of vertical differentiation, wage is assumed to determine the quality. Wage is also subject to bargaining. Increased bargaining power of the worker in the low quality firm reduces quality differential, and increases price competitiveness. The Opposite happens from a similar change in the high quality firm.

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    File URL: http://mpra.ub.uni-muenchen.de/30968/
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    Bibliographic Info

    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30968.

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    Date of creation: 20 May 2011
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    Handle: RePEc:pra:mprapa:30968

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    Keywords: Wage bargaining; Quality competition;

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    1. Gabszewicz, J. & Turrini, A., 2000. "Workers' skills, product quality and industry equilibrium," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 18(4), pages 575-593, May.
    2. Motta, Massimo, 1993. "Endogenous Quality Choice: Price vs. Quantity Competition," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 41(2), pages 113-31, June.
    3. Jaskold Gabszewicz, J. & Thisse, J. -F., 1979. "Price competition, quality and income disparities," Journal of Economic Theory, Elsevier, Elsevier, vol. 20(3), pages 340-359, June.
    4. Dowrick, Steve, 1989. "Union-Oligopoly Bargaining," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 99(398), pages 1123-42, December.
    5. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 3-13, January.
    6. Kraft, Kornelius, 1998. "The codetermined firm in oligopoly," Economics Letters, Elsevier, Elsevier, vol. 61(2), pages 195-201, November.
    7. Bughin, J., 1995. "Unions and strategic managerial incentives," Economics Letters, Elsevier, Elsevier, vol. 47(1), pages 95-100, January.
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