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Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand

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  • Ohnishi, Kazuhiro
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    Abstract

    This paper is based on a two-stage model of an incumbent firm and a potential entrant, and studies both quantity-setting competition and price-setting competition. We consider a lifetime-employment-contract policy as a strategic commitment that generates kinks in the reaction curve. Furthermore, demand functions are classified into two cases in terms of the strategic relevance between both firms. Therefore, we examine the following four cases: "quantity-setting competition with strategic substitutes", "quantity-setting competition with strategic complements", "price-setting competition with strategic substitutes" and "price-setting competition with strategic complements". The purpose of this paper is to analyse entry deterrence in the four cases and to show the effectiveness of the lifetime-employment-contract policy as a result of its analyses. Copyright 2001 by Blackwell Publishers Ltd/University of Adelaide and Flinders University of South Australia

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    Bibliographic Info

    Article provided by Wiley Blackwell in its journal Australian Economic Papers.

    Volume (Year): 40 (2001)
    Issue (Month): 1 (March)
    Pages: 30-43

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    Handle: RePEc:bla:ausecp:v:40:y:2001:i:1:p:30-43

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    Web page: http://www.blackwellpublishing.com/journal.asp?ref=0004-900X

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    Cited by:
    1. Rupayan Pal & Bibhas Saha, 2010. "Entry Threats, and Inefficiency in ‘Efficient Bargaining’," Labor Economics Working Papers 23020, East Asian Bureau of Economic Research.
    2. Ohnishi, Kazuhiro, 2011. "Lifetime employment contract and reaction functions of profit-maximizing and labor-managed firms," Research in Economics, Elsevier, vol. 65(3), pages 152-157, September.
    3. Kazuhiro Ohnishi, 2007. "Wage-Rise Contract and Entry Deterrence: Bertrand and Cournot," Annals of Economics and Finance, Society for AEF, vol. 8(1), pages 155-165, May.
    4. Rupayan Pal & Bibhas Saha, 2010. "Entry Threats and Inefficiency in ‘Efficient Bargaining’," Working Papers id:2833, eSocialSciences.
    5. Kazuhiro Ohnishi, 2006. "Investment Decisions in a New Mixed Market," Annals of Economics and Finance, Society for AEF, vol. 7(2), pages 271-281, November.
    6. Rupayan Pal & Bibhas Saha, 2008. "Union-Oligopoly Bargaining and Entry Deterrence:A Reassessment of Limit Pricing," Working Papers id:1375, eSocialSciences.
    7. Kazuhiro Ohnishi, 2003. "A Note on the Most-Favoured-Customer Pricing Policy," Bulletin of Economic Research, Wiley Blackwell, vol. 55(4), pages 407-413, October.

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