Duopolistic Hiring and Sales Competition — A Theoretical and Experimental Analysis

34 Pages Posted: 3 Oct 2012

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

Christian Hoppe

affiliation not provided to SSRN

Christian Paul

affiliation not provided to SSRN

Date Written: November 2012

Abstract

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.

Suggested Citation

Berninghaus, Siegfried and Güth, Werner and Hoppe, Christian and Paul, Christian, Duopolistic Hiring and Sales Competition — A Theoretical and Experimental Analysis (November 2012). Metroeconomica, Vol. 63, Issue 4, pp. 693-726, 2012, Available at SSRN: https://ssrn.com/abstract=2156066 or http://dx.doi.org/10.1111/j.1467-999X.2012.04161.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

Christian Hoppe

affiliation not provided to SSRN

Christian Paul

affiliation not provided to SSRN

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