Real Estate Papers

Document Type

Journal Article

Date of this Version

1-2006

Publication Source

Regional Science and Urban Economics

Volume

36

Issue

1

Start Page

1

Last Page

28

DOI

10.1016/j.regsciurbeco.2005.06.003

Abstract

When firms cluster in the same local labour market, they face a trade-off between the benefits of labour pooling (i.e., access to workers whose knowledge help reduce costs) and the costs of labour poaching (i.e., loss of some key workers to competition and a higher wage bill to retain the others). We explore this tradeoff in a duopoly game. Depending on market size, on the degree of horizontal differentiation between goods, and on worker heterogeneity in terms of knowledge transfer cost, we characterise the strategic choices of firms regarding locations, wages, poaching and prices. Our results show that co-location, although it is always efficient in our framework, is not in general the non-cooperative equilibrium outcome.

Copyright/Permission Statement

© 2006. This manuscript version is made available under the CC-BY-NC-ND 4.0 license

Keywords

labour pooling, labour poaching, film clustering, agglomeration

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Date Posted: 27 November 2017

This document has been peer reviewed.