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Scarce human resources and equilibrium industry structure

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  • Huasheng Song

    (Zhejiang University)

  • Ruqu Wang

    (Zhejiang University
    Queen’s University)

  • Jianliang Ye

    (Zhejiang University)

Abstract

We investigate how the initial distribution of scarce human resources determines the equilibrium industry structure. Using a two-firm competition model with resource-dependent production technology, we examine the flow of these resources in gradual trading, one-off trading, and Walrasian trading. We find that the evolution of an industry’s structure depends on the total amount of resources available relative to the market size. When resources are plentiful, a symmetric duopoly emerges through the trading of the resources. In all three models, a monopoly emerges when the resources are sufficiently scarce. This is in contrast to the results obtained by many existing models of capacity found in the literature.

Suggested Citation

  • Huasheng Song & Ruqu Wang & Jianliang Ye, 2018. "Scarce human resources and equilibrium industry structure," Journal of Economics, Springer, vol. 124(2), pages 99-119, June.
    • Handle: RePEc:kap:jeczfn:v:124:y:2018:i:2:d:10.1007_s00712-017-0566-0
    DOI: 10.1007/s00712-017-0566-0
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