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Amal Hili, Rim Lahmandi-Ayed and Hejer Lasram
''Vertical differentiation and labor market: the differentiation principle revisited''
( 2015, Vol. 35 No.1 )
The labor market is introduced into the standard vertical differentiation model, linking increasingly the quality of the product and the effort necessary for workers to produce it. Surprisingly, when two firms compete on the product market but are monopolies on the labor market, at equilibrium they choose not to differentiate their products, which is different from the result obtained with standard vertical differentiation models.
Keywords: Vertical differentiation, competition, product market, labor market.
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
J4 - Particular Labor Markets: General
Manuscript Received : Sep 09 2014 Manuscript Accepted : Mar 22 2015

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