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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.

Suggested Citation

  • 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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    1. 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.
    2. Gilbert, Richard J., 1989. "Mobility barriers and the value of incumbency," Handbook of Industrial Organization,in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 8, pages 475-535 Elsevier.
    3. 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 308-328, May.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    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. 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.
    10. 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.
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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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