Minimum Wages and Welfare in a Hotelling Duopsony

46 Pages Posted: 23 May 2008

See all articles by Leo Kaas

Leo Kaas

Goethe University Frankfurt; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute)

Paul Madden

The University of Manchester - School of Social Sciences

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

Kaas, Leo and Madden, Paul, Minimum Wages and Welfare in a Hotelling Duopsony. IZA Working Paper No. 3434, Available at SSRN: https://ssrn.com/abstract=1136239 or http://dx.doi.org/10.2139/ssrn.1136239

Leo Kaas (Contact Author)

Goethe University Frankfurt ( email )

House of Finance
Theodor-W.-Adorno-Platz 3
Frankfurt, Hesse 60629
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

Paul Madden

The University of Manchester - School of Social Sciences ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
55
Abstract Views
789
Rank
670,520
PlumX Metrics