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A Product-Market Theory of Industry-Specific Training

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Author Info
Hans Gersbach () (CER-ETH - Center of Economic Research, ETH Zurich)
Armin Schmutzler () (Socioeconomic Institute, University of Zurich)

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Abstract

We develop a product market theory that explains why firms provide their workers with skills that are sufficiently general to be potentially useful for competitors. We consider a model where firms first decide whether to invest in industry-specific human capital, then make wage offers for each others’ trained employees and finally engage in imperfect product market competition. Equilibria with and without training, and multiple equilibria can emerge. If competition is sufficiently soft and returns to the number of trained workers decrease sufficiently, firms may invest in non-specific training if others do the same, because they would otherwise suffer a competitive disadvantage or need to pay high wages in order to attract trained workers.

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File URL: http://www.soi.uzh.ch/research/wp/2006/wp0610.pdf
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Publisher Info
Paper provided by University of Zurich, Socioeconomic Institute in its series Working Papers with number 0610.

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Length: 28 pages
Date of creation: Nov 2006
Date of revision:
Handle: RePEc:soz:wpaper:0610

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Related research
Keywords: industry-specific training; human capital; oligopoly; turnover;

Other versions of this item:

Find related papers by JEL classification:
D42 - Microeconomics - - Market Structure and Pricing - - - Monopoly
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
L92 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Railroads and Other Surface Transportation

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Gärtner, Dennis & Schmutzler, Armin, 2006. "Merger Negotiations and Ex-Post Regret," CEPR Discussion Papers 5911, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. Philippe Mahler & Rainer Winkelmann, 2005. "Single Motherhood and (Un)Equal EducationalOpportunities: Evidence for Germany," Working Papers 0512, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  3. Hans Gersbach & Armin Schmutzler, 2006. "Foreign Direct Investment and R&D offshoring," Working Papers 0606, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  4. Stefan Boes & Markus Lipp & Rainer Winkelmann, 2005. "Money Illusion Under Test," Working Papers 0514, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  5. Dennis L. Gärtner & Daniel Halbheer, 2008. "Are There Waves in Merger Activity After All?," Working Papers 0092, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
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  6. Sandra Hanslin & Rainer Winkelmann, 2006. "The Apple Falls Increasingly Far: Parent-Child Correlation in Schooling and the Growth of Post-Secondary Education in Switzerland," Working Papers 0603, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  7. Stefan Boes & Rainer Winkelmann, 2006. "The Effect of Income on Positive and Negative Subjective Well-Being," Working Papers 0605, University of Zurich, Socioeconomic Institute. [Downloadable!]
  8. Yves Schneider & Peter Zweifel, 2005. "Spatial Effects in Willingness-to-Pay: The Case of Two Nuclear Risks," Working Papers 0502, University of Zurich, Socioeconomic Institute, revised Sep 2007. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Ilja Neustadt & Peter Zweifel, 2009. "Social Mobility and Preferences for Income Redistribution: Evidence from a Discrete Choice Experiment," Working Papers 0909, University of Zurich, Socioeconomic Institute. [Downloadable!]
  2. Rafael Lalive & Armin Schmutzler, 2005. "Exploring the Effects of Competition for Railway Markets," Working Papers 0511, University of Zurich, Socioeconomic Institute, revised Apr 2007. [Downloadable!]
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  3. Dario Sacco & Armin Schmutzler, 2008. "Competition and Innovation: An Experimental Investigation," Working Papers 0807, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  4. Lukas Steinmann & Harry Telser & Peter Zweifel, 2005. "The Impact of Aging on Future Healthcare Expenditure," Working Papers 0510, University of Zurich, Socioeconomic Institute, revised Dec 2006. [Downloadable!]
  5. Sandra Hanslin, 2008. "The effect of trade openness on optimal government size under endogenous firm entry," Working Papers 0802, University of Zurich, Socioeconomic Institute. [Downloadable!]
  6. Stefan Boes, 2007. "Nonparametric Analysis of Treatment Effects in Ordered Response Models," Working Papers 0709, University of Zurich, Socioeconomic Institute. [Downloadable!]
  7. Spyros Arvanitis, 2008. "Are Firm Innovativeness and Firm Age Relevant for the Supply of Vocational Training? – A Study Based on Swiss Micro Data," Economics of Education Working Paper Series 0036, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
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  8. Johannes Schoder & Peter Zweifel, 2008. "Managed Care Konzepte und Lösungsansätze– Ein internationaler Vergleich aus schweizerischer Sicht," Working Papers 0801, University of Zurich, Socioeconomic Institute. [Downloadable!]
  9. Spyros Arvanitis & Tobias Stucki, 2008. "Training Propensity of Start-ups in Switzerland - A Study Based on Data for the Start-up Cohort 1996-97," Economics of Education Working Paper Series 0035, University of Zurich, Institute for Strategy and Business Economics (ISU). [Downloadable!]
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  10. Dennis Gaertner, 2007. "Monopolistic Screening under Learning By Doing," Working Papers 0718, University of Zurich, Socioeconomic Institute. [Downloadable!]
  11. Josef Falkinger, 2008. "Between Agora and Shopping Mall," Working Papers 0805, University of Zurich, Socioeconomic Institute. [Downloadable!]
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  12. Heinz Hollenstein & Tobias Stucki, 2008. "The Impact of ICT Usage, Workplace Organisation and Human Capital on the Provision of Apprenticeship Training : A Firm-level Analysis Based on Swiss Panel Data," Working papers 08-205, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  13. Spyros Arvanitis & Euripidis N. Loukis, 2009. "Employee Education, Information and Communication Technology, Workplace Organization and Trade: A Comparative Analysis of Greek and Swiss Enterprises," Working papers 09-234, KOF Swiss Economic Institute, ETH Zurich. [Downloadable!]
  14. Helga Fehr-Duda & Adrian Bruhin & Thomas Epper & Renate Schubert, 2007. "Rationality on the Rise: Why Relative Risk Aversion Increases with Stake Size," Working Papers 0708, University of Zurich, Socioeconomic Institute, revised Feb 2008. [Downloadable!]
  15. Katja Goerlitz, 2009. "The Development of Employers’ Training Investments Over Time – A Decomposition Analysis Using German Establishment Data," Ruhr Economic Papers 0087, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen. [Downloadable!]
  16. Adrian Bruhin, 2008. "Stochastic Expected Utility and Prospect Theory in a Horse Race: A Finite Mixture Approach," Working Papers 0803, University of Zurich, Socioeconomic Institute. [Downloadable!]
  17. Dennis Gaertner, 2007. "Why Bayes Rules: A Note on Bayesian vs. Classical Inference in Regime Switching Models," Working Papers 0719, University of Zurich, Socioeconomic Institute. [Downloadable!]
  18. Dario Sacco & Armin Schmutzler, 2008. "All-Pay Auctions with Negative Prize Externalities: Theory and Experimental Evidence," Working Papers 0806, University of Zurich, Socioeconomic Institute. [Downloadable!]
  19. Daniel Halbheer & Ernst Fehr & Lorenz Goette & Armin Schmutzler, 2007. "Self-Reinforcing Market Dominance," Working Papers 0711, University of Zurich, Socioeconomic Institute. [Downloadable!]
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