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Pro-competitive effect, division of labor, and firm productivity. (English) Zbl 1295.91063

Summary: This study constructs a general oligopolistic equilibrium model in which Smith’s (1776) famous theory of the division of labor under vertical specialization is embedded. We demonstrate that a pro-competitive government policy weakens the division of labor and hence reduces firm productivity, total output, and aggregate welfare. In addition, the policy promotes an increase in workers’ welfare and a decrease in firm owners’ welfare.

MSC:

91B54 Special types of economic markets (including Cournot, Bertrand)
91B38 Production theory, theory of the firm
91B40 Labor market, contracts (MSC2010)
91B50 General equilibrium theory
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References:

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