Buying Versus Hiring: An Indirect Evolutionary Approach

19 Pages Posted: 13 Oct 2009

See all articles by Siegfried Berninghaus

Siegfried Berninghaus

Institut fuer Statistik und Mathematische Wirtscha

Werner Güth

Max Planck Institute for Research on Collective Goods; Luiss Guido Carli University

Abstract

On a symmetric homogeneous oligopoly market with stochastic demand, firms can either hire employees or buy their labor input on a competitive labor market. Whereas the wage of hired labor does not depend on the realization of stochastic demand, the price of ‘bought’ labor reacts positively to product demand. We derive the equilibrium price vector to define an evolutionary process, assuming that the number of hiring firms increases when they earn more than buying firms. We then derive and discuss the stationary distribution of this stochastic adaptation process.

Suggested Citation

Berninghaus, Siegfried and Güth, Werner, Buying Versus Hiring: An Indirect Evolutionary Approach. Metroeconomica, Vol. 60, Issue 4, pp. 619-637, November 2009, Available at SSRN: https://ssrn.com/abstract=1487305 or http://dx.doi.org/10.1111/j.1467-999X.2008.00358.x

Siegfried Berninghaus (Contact Author)

Institut fuer Statistik und Mathematische Wirtscha ( email )

Building 20.21
Universitaet Karlsruhe Gebaeude 20.21
76128 Karlsruhe
Germany

Werner Güth

Max Planck Institute for Research on Collective Goods

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany

Luiss Guido Carli University ( email )

Via O. Tommasini 1
Rome, Roma 00100
Italy

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
3
Abstract Views
364
PlumX Metrics