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

Listed author(s):
  • Siegfried K. Berninghaus
  • Werner Güth


  • Christian Hoppe
  • Christian Paul

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.

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Paper provided by Max Planck Institute of Economics, Strategic Interaction Group in its series Papers on Strategic Interaction with number 2006-39.

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Length: 49 pages
Date of creation: Mar 2007
Handle: RePEc:esi:discus:2006-39
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