Munich Personal RePEc Archive

Wage bargaining and quality competition

Bhattacharyya, Ranajoy and Saha, Bibhas (2011): Wage bargaining and quality competition.

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Abstract

In a standard model of vertical differentiation, wage is assumed to determine the quality. Wage is also subject to bargaining. Increased bargaining power of the worker in the low quality firm reduces quality differential, and increases price competitiveness. The Opposite happens from a similar change in the high quality firm.

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