Economics and Finance


The Value of Strategic Commitment in Mixed Duopoly Games with a Foreign Labor-Managed Firm

Authors: Kazuhiro OHNISHI

This paper investigates an economy consisting of a state-owned firm and a foreign labor-managed firm. First, the paper considers a Cournot game where only the state-owned firm is allowed to offer lifetime employment as a strategic commitment, and demonstrates that there is a stable equilibrium which is profitable only for the state-owned firm. Next, the paper examines a Cournot game where only the foreign labor-managed firm can offer lifetime employment as a strategic commitment, and shows that there are two stable equilibria. The purpose of this study is to show the value of lifetime employment as a strategic commitment.

Comments: 17 Pages. Published in The UNIVERSITY WITHOUT BORDERS Journal of ECONOMICS & BUSINESS;

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[v1] 2018-07-01 03:10:04

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