Minimum Wages and Welfare in a Hotelling Duopsony
46 Pages Posted: 23 May 2008
Abstract
Two firms choose locations (non-wage job characteristics) on the interval [0,1] prior to announcing wages at which they employ workers who are uniformly distributed' the (constant) marginal revenue products of workers may differ. Subgame perfect equilibria of the two-stage location-wage game are studied under laissez-faire and under a minimum wage regime. Up to a restriction for the existence of pure strategy equilibria, the imposition of a minimum wage is always welfare-improving because of its effect on non-wage job characteristics.
Keywords: hotelling, duopsony, minimum wages
JEL Classification: D43, E24, J48
Suggested Citation: Suggested Citation
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