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Strategic commitment and Cournot competition with labor-managed and profit-maximizing firms

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  • Ohnishi, Kazuhiro

Abstract

This 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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  • Ohnishi, Kazuhiro, 2008. "Strategic commitment and Cournot competition with labor-managed and profit-maximizing firms," Research in Economics, Elsevier, vol. 62(4), pages 188-196, December.
    • Handle: RePEc:eee:reecon:v:62:y:2008:i:4:p:188-196
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    References listed on IDEAS

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    Cited by:

    1. Kazuhiro Ohnishi, 2019. "Capacity choice in an international mixed triopoly," Working Papers e140, Tokyo Center for 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. Ohnishi, Kazuhiro, 2019. "Capacity choice in an international mixed triopoly," MPRA Paper 94051, University Library of Munich, Germany.

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