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International Competition in Hiring Labor and Selling Output - A Theoretical and Experimental Analysis

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  • Siegfried K. Berninghaus
  • Werner Güth
  • Christian Hoppe
  • Christian Paul

Abstract

Two firms, firm A in country A and firm B in country B, compete in hiring two types of workers. Type 1-workers would be less productive when working abroad whereas type 2-workers are equally productive when working abroad or at home. Employers compete by offering employment contracts for both types of workers as well as for workers in both countries. Hiring determines output and thus the sales on the homogenous international sales market. We show that the scenario with firm A(B) hiring only workers from country A(B) is an equilibrium, i.e., there exists a parameter region with this equilibrium outcome. For our experiment with a specific parameter constellation we want to explore some qualitative hypotheses, related to this equilibrium scenario.

Suggested Citation

  • Siegfried K. Berninghaus & Werner Güth & Christian Hoppe & Christian Paul, 2007. "International Competition in Hiring Labor and Selling Output - A Theoretical and Experimental Analysis," Papers on Strategic Interaction 2006-39, Max Planck Institute of Economics, Strategic Interaction Group.
    • Handle: RePEc:esi:discus:2006-39
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    File URL: ftp://papers.econ.mpg.de/esi/discussionpapers/2006-39.pdf
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    Cited by:

    1. Werner Güth & Kerstin Pull & Manfred Stadler, 2009. "Intra-firm Conflicts and Interfirm Competition," Jena Economics Research Papers 2009-007, Friedrich-Schiller-University Jena.

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