Strategic commitment and Cournot competition with labor-managed and profit-maximizing firms
AbstractThis paper examines the behavior of a labor-managed income-per-member-maximizing firm and a profit-maximizing firm in a quantity-setting model with a strategic commitment. First, each firm independently decides whether or not to make a commitment to capacity. This capacity may subsequently be increased, but cannot be decreased. Hence, each firm's investment choice changes its capital cost from a variable one into a fixed one. Second, each firm independently chooses its actual output. The paper examines the equilibrium of the quantity-setting mixed model and shows whether or not capacity investment is effective for the labor-managed firm and the profit-maximizing firm.
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Bibliographic InfoArticle provided by Elsevier in its journal Research in Economics.
Volume (Year): 62 (2008)
Issue (Month): 4 (December)
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Web page: http://www.elsevier.com/locate/inca/622941
Labor-managed firm Profit-maximizing firm Strategic commitment;
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