Job competition, product market competition and welfare
AbstractThis paper presents a model of labour supply determination under job competition. In the presence of a positive rate of unemployment and increasing returns to labour, the level of labour supply chosen by each individual lies above the one that, at the offered wage, maximises utility. There is a unique strictly positive degree of job competition that is consistent with the optimal allocation. If labour supply is upward-sloping, increasing job competition raises the equilibrium level of activity and, when job competition causes production to exceed its optimal level, reducing output market competition leads to a welfare improvement.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35410.
Date of creation: 14 Dec 2011
Date of revision:
labour supply; job competition; welfare; product market competition;
Find related papers by JEL classification:
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
- D60 - Microeconomics - - Welfare Economics - - - General
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-03 (All new papers)
- NEP-COM-2012-01-03 (Industrial Competition)
- NEP-LAB-2012-01-03 (Labour Economics)
- NEP-LMA-2012-01-03 (Labor Markets - Supply, Demand, & Wages)
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