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

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  • Ohnishi, Kazuhiro
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    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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    Bibliographic Info

    Article provided by Elsevier in its journal Research in Economics.

    Volume (Year): 62 (2008)
    Issue (Month): 4 (December)
    Pages: 188-196

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    Handle: RePEc:eee:reecon:v:62:y:2008:i:4:p:188-196

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    Web page: http://www.elsevier.com/locate/inca/622941

    Related research

    Keywords: Labor-managed firm Profit-maximizing firm Strategic commitment;

    References

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    1. Hugh M. Neary & David Ulph, 1997. "Strategic Investment and the Co-existence of Labour-Managed and Profit-Maximising Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 30(2), pages 308-28, May.
    2. Ireland, Norman J., 2003. "Random pricing by labor-managed firms in markets with imperfect consumer information," Journal of Comparative Economics, Elsevier, vol. 31(3), pages 573-583, September.
    3. Lambertini, Luca & Rossini, Gianpaolo, 1998. "Capital Commitment and Cournot Competition with Labour-Managed and Profit-Maximising Firms," Australian Economic Papers, Wiley Blackwell, vol. 37(1), pages 14-21, March.
    4. Stewart, Geoff, 1992. "Management objectives and strategic interactions among capitalist and labour-managed firms," Journal of Economic Behavior & Organization, Elsevier, vol. 17(3), pages 423-431, May.
    5. Gilbert, Richard, 1988. "Mobility Barriers and the Value of Incumbency," Department of Economics, Working Paper Series qt52q9j63w, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
    6. Delbono, Flavio & Rossini, Gianpaolo, 1992. "Competition policy vs horizontal merger with public, entrepreneurial, and labor-managed firms," Journal of Comparative Economics, Elsevier, vol. 16(2), pages 226-240, June.
    7. Cremer, Helmuth & Cremer, Jacques, 1992. "Duopoly with employee-controlled and profit-maximizing firms: Bertrand vs Cournot competition," Journal of Comparative Economics, Elsevier, vol. 16(2), pages 241-258, June.
    8. Peter J. LAW & Geoff STEWART, 1983. "Stackelberg Duopoly with an Illyrian and Profit-Maximising Firm," Discussion Papers (REL - Recherches Economiques de Louvain) 1983026, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    9. Horowitz, Ira, 1991. "On the effects of cournot rivalry between entrepreneurial and cooperative firms," Journal of Comparative Economics, Elsevier, vol. 15(1), pages 115-121, March.
    10. Futagami, Koichi & Okamura, Makoto, 1996. "Strategic Investment: The Labor-Managed Firm and the Profit-Maximizing Firm," Journal of Comparative Economics, Elsevier, vol. 23(1), pages 73-91, August.
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    Cited by:
    1. 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.

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