... market provides
safe workplaces. Let Δ denote the compensating wage differential. Demand for workers in
the risky sector is LD(“risky”) = 1000 – Δ. The corresponding supply is LS(“risky”) = (1/2)*Δ.
For safety reasons, the government restricts the maximum number of workers in the risky
sector to 200. How large is the wage differential in equilibrium if (i) many firms compete for
workers, (ii) only one firm is operating in the risky sector?