Supermarkets Battle for Staff

When we teach oligopolies we focus rather more on price stickiness in product markets, having made a number of assumptions about the nature of the market, notably the interdependence of firms in the market.

This article highlights interdependence in factor markets, with supermarkets competing for staff, and in this case, firms also adopt similar behaviours, with firms effectively shadowing one another for a period of time, with a stable equilibrium wage, until someone breaks rank, offers a higher range and other supermarkets fall into line.

This is exactly what's happening here - initially it was discounters who offered higher wages, but these have been matched and now, potentially surpassed by Marks & Spencer offering staff £12 per hour outside the capital and £13.15 in London. Expect other supermarkets to follow suit.