Do Dominant Firms Provide More Training?

This paper examines the relationship between firm-specific training and product market competition. A canonical Cournot competition model shows that the profitability of training investments increases as the number of competitors decreases. Empirical evidence from British establishments in 1998, 2004 and 2011 confirms that a critical form of specific training, cross-training, is far more extensive in less competitive product markets. This persists within all three separate cross-sections and in two separate panel estimates and suggests that a dominant product market position increases the incentives to invest in specific human capital.