Vertical Differentiation and Labour in a General Equilibrium Model

40 Pages Posted: 27 Jan 2016

See all articles by Amani Kahloul

Amani Kahloul

University of Sousse

Rim Lahmandi-Ayed

University of Tunis - Ecole Polytechnique de Tunisie

Hejer Lasram

Institut des Hautes Etudes Commerciales (IHEC)

Didier Laussel

Aix-Marseille University; University of the Mediterranean

Date Written: January 26, 2016

Abstract

We consider a general equilibrium model with vertical preferences and a limited number of firms, where workers and consumers are differentiated respectively by their sensitivity to effort and their preference for quality. We compare the duopoly and the monopoly cases from the view point of each individual, then we deduce the choice of the majority. We prove that, in a concentrated-ownership society, the duopoly is always preferred by the majority, while in an egalitarian-ownership society, the choice of the majority depends on the size of workers and consumers segments.

Keywords: Vertical differentiation, labor market, general equilibrium, social choice

JEL Classification: D7, J4, L13

Suggested Citation

Kahloul, Amani and Lahmandi-Ayed, Rim and Lasram, Hejer and Laussel, Didier, Vertical Differentiation and Labour in a General Equilibrium Model (January 26, 2016). Available at SSRN: https://ssrn.com/abstract=2722448 or http://dx.doi.org/10.2139/ssrn.2722448

Amani Kahloul (Contact Author)

University of Sousse ( email )

rue Abdelaziz el Behi
Sousse, Sousse 4000
Tunisia

Rim Lahmandi-Ayed

University of Tunis - Ecole Polytechnique de Tunisie ( email )

B.P. 743
La Marsa, 2078
Tunisia

Hejer Lasram

Institut des Hautes Etudes Commerciales (IHEC) ( email )

SAHLOUL3
Carthage, Tunis 2016
Tunisia

Didier Laussel

Aix-Marseille University ( email )

3 Avenue Robert Schuman
3 Avenue Robert Schuman,
Aix-en-Provence, 13628
France

University of the Mediterranean

58 Bd Charles Livon
Marseille, 13 002
France

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