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Job competition, product market competition and welfare

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  • Pompermaier, Alberto

Abstract

This paper presents a model of labour supply determination under job competition. In the presence of a positive rate of unemployment and increasing returns to labour, the level of labour supply chosen by each individual lies above the one that, at the offered wage, maximises utility. There is a unique strictly positive degree of job competition that is consistent with the optimal allocation. If labour supply is upward-sloping, increasing job competition raises the equilibrium level of activity and, when job competition causes production to exceed its optimal level, reducing output market competition leads to a welfare improvement.

Suggested Citation

  • Pompermaier, Alberto, 2011. "Job competition, product market competition and welfare," MPRA Paper 35410, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:35410
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    File URL: https://mpra.ub.uni-muenchen.de/35410/1/MPRA_paper_35410.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    labour supply; job competition; welfare; product market competition;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D60 - Microeconomics - - Welfare Economics - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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