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Product Market Competition, Labor Mobility, and Firm-Sponsored Training : New Implications of Market Power

Author

Listed:
  • GHOSH, Arghya
  • HODAKA, Morita
  • SATO, Susumu

Abstract

Firms compete in both product and labor markets by making decisions about hiring, training, and poaching workers. We develop a theoretical model in which firm-sponsored training links product and labor market competition. Changes in labor, product, or overall market power influence firms' incentives to invest in training, which can lead to clear-cut welfare improvements benefiting all relevant parties. The distinction between under- vs. overinvestment in training, a unique feature that emerges from the interaction between the two markets, plays a critical role in determining whether or not such welfare improvements are possible, enriching welfare and policy implications.

Suggested Citation

  • GHOSH, Arghya & HODAKA, Morita & SATO, Susumu, 2026. "Product Market Competition, Labor Mobility, and Firm-Sponsored Training : New Implications of Market Power," CEI Working Paper Series 2025-04, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:hitcei:2025-04
    as

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    File URL: https://hit-u.repo.nii.ac.jp/record/2062017/files/wp2025-04.pdf
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    References listed on IDEAS

    as
    1. Justin P. Johnson & David P. Myatt, 2003. "Multiproduct Quality Competition: Fighting Brands and Product Line Pruning," American Economic Review, American Economic Association, vol. 93(3), pages 748-774, June.
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    Keywords

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    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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