Firm size and diversification: Multiproduct firms in asymmetric oligopoly

Grossmann, Volker

doi:10.1016/j.ijindorg.2005.12.003

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Journal article

Firm size and diversification: Multiproduct firms in asymmetric oligopoly

BP2-STS

Grossmann, Volker ORCID University of Fribourg

2007

Published in:

International Journal of Industrial Organization. - Elsevier BV. - 2007, vol. 25, no. 1, p. 51-67

Econometrics and Finance (miscellaneous)

English This paper explores the equilibrium assignment of nonproduction workers across ex ante identical firms which results from this interaction between product market and the market for nonproduction skills. The analysis suggests that, typically, large and productive firms coexist with small, low-productivity firms. Consistent with empirical evidence, a skewed distribution of firm size tends to arise. Moreover, the model predicts a positive relationship of firm size to productivity, manager quality, and manager remuneration. Finally, according to comparative-static analysis, higher intensity of product market competition can account for increases in the compensation at the top of the wage distribution.

Faculty

Faculté des sciences économiques et sociales et du management

Department

Département d'économie politique

Language