Faculty of Economics and Business Administration Publications Database

Minimum wages and welfare in a Hotelling duopsony

Madden, Paul
Volume: 43
Pages: 167 - 188
Month: May
ISSN-Print: 0938-2259
Link External Source: Online Version
Year: 2010
Keywords: Hotelling; Duopsony; Minimum wages

Two firms choose locations (non-wage job characteristics) on the interval [0,1] prior to announcing wages at which they employ workers who are uniformly distributed; the (constant) marginal revenue products of workers may differ. Subgame perfect equilibria of the two-stage location-wage game are studied under laissez-faire and under a minimum wage regime. Up to a restriction for the existence of pure strategy equilibria, the imposition of a minimum wage is always welfare-improving because of its effect on non-wage job characteristics.
(This abstract was borrowed from another version of this item.)