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DUOPOLISTIC HIRING AND SALES COMPETITION—A THEORETICAL AND EXPERIMENTAL ANALYSIS
Author(s) -
Berninghaus Siegfried K.,
Güth Werner,
Hoppe Christian,
Paul Christian
Publication year - 2012
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.2012.04161.x
Subject(s) - competition (biology) , monopolistic competition , workforce , microeconomics , industrial organization , labour economics , economics , production (economics) , business , contrast (vision) , monopoly , computer science , ecology , artificial intelligence , biology , economic growth
Two firms compete in selling as well as hiring, where sales levels depend on the hired workforce. There are two types of workers, mobile and immobile, differing in effort costs, and two workers of each type. The principals offer contracts to all workers, who then select an employer. Finally, the workers determine production levels and profits. Our experimental results show: vanishing cost differences between mobile and immobile workers induce monopolistic hiring but low profits. In contrast, large cost differences result in higher profits and allow for various hiring constellations such as one firm hiring only low‐cost workers.