Strategic Commitment and Three-Stage Games with Labour-Managed and Profit-Maximizing Firms
This paper examines two three-stage games with a labor-managed income-perworker- maximizing firm and a profit-maximizing firm. In the first stage, the labormanaged firm (resp. the profit-maximizing firm) decides whether to make a commitment to capacity. In the second stage, the other firm decides on a commitment to capacity. In the third stage, both firms non-cooperatively choose quantities. The paper shows the equilibrium outcomes of the two three-stage games. The paper then finds that the introduction of capacity commitment into the analysis of threestage mixed market games is profitable for the labor-managed firm while it is not profitable for the profit-maximizing firm.
Volume (Year): 22 (2009)
Issue (Month): 2 (Autumn)
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