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Wage-Rise Contract and Cournot Competition with Labor-Managed Firms

Author

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  • Kazuhiro Ohnishi

    (Osaka University and Institute for Basic Economic Science)

Abstract

This paper examines the effectiveness of the wage-rise-contract policy as a strategic commitment in a two-stage quantity-settingmodel with two labor-managed income-per-worker-maximizing firms. The policy is a promise by the firm that it will announce acertain output level and a wage premium rate, and if it actually produces more than the announced output level, then it will pay each employee a wage premium uniformly. In the first stage, each firm independently decides whether or not to adopt the policy. In the second stage, each firm independently chooses its actual output. It is then shown that there exists an equilibrium in which at least one firm adopts the policy.

Suggested Citation

  • Kazuhiro Ohnishi, 2007. "Wage-Rise Contract and Cournot Competition with Labor-Managed Firms," Rivista di Politica Economica, SIPI Spa, vol. 97(3), pages 17-32, May-June.
    • Handle: RePEc:rpo:ripoec:v:97:y:2007:i:3:p:17-32
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    Cited by:

    1. Ohnishi, Kazuhiro, 2022. "Wage-rise contract and mixed Cournot duopoly competition with profit-maximizing and socially concerned firms," MPRA Paper 112536, University Library of Munich, Germany.
    2. Ohnishi, Kazuhiro, 2018. "Wage-Rise Contract and Labour-Managed Cournot Oligopoly with Complementary Goods," MPRA Paper 88235, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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