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Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand

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  • Kazuhiro Ohnishi

Abstract

This paper is based on a two‐stage model of an incumbent firm and a potential entrant, and studies both quantity‐setting competition and price‐setting competition. We consider a lifetime‐employment‐contract policy as a strategic commitment that generates kinks in the reaction curve. Furthermore, demand functions are classified into two cases in terms of the strategic relevance between both firms. Therefore, we examine the following four cases: ‘quantity‐setting competition with strategic substitutes’, ‘quantity‐setting competition with strategic complements’, ‘price‐setting competition with strategic substitutes’ and ‘price‐setting competition with strategic complements’. The purpose of this paper is to analyse entry deterrence in the four cases and to show the effectiveness of the lifetime‐employment‐contract policy as a result of its analyses.

Suggested Citation

  • Kazuhiro Ohnishi, 2001. "Lifetime Employment Contract and Strategic Entry Deterrence: Cournot and Bertrand," Australian Economic Papers, Wiley Blackwell, vol. 40(1), pages 30-43, March.
    • Handle: RePEc:bla:ausecp:v:40:y:2001:i:1:p:30-43
    DOI: 10.1111/1467-8454.00111
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    Cited by:

    1. Rupayan Pal & Bibhas Saha, 2008. "Union-oligopoly bargaining and entry deterrence: a reassessment of limit pricing," Journal of Economics, Springer, vol. 95(2), pages 121-147, November.
    2. Rupayan Pal & Bibhas Saha, 2016. "Entry Threats and Inefficiency in ‘Efficient Bargaining’," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(3), pages 258-277, July.
    3. Ohnishi, Kazuhiro, 2022. "Socially concerned duopolies with lifetime employment as a strategic commitment," MPRA Paper 111625, University Library of Munich, Germany.
    4. Kazuhiro Ohnishi, 2007. "Wage-Rise Contract and Entry Deterrence: Bertrand and Cournot," Annals of Economics and Finance, Society for AEF, vol. 8(1), pages 155-165, May.
    5. Kazuhiro Ohnishi, 2003. "A Note on the Most‐Favoured‐Customer Pricing Policy," Bulletin of Economic Research, Wiley Blackwell, vol. 55(4), pages 407-413, October.
    6. Rupayan Pal & Bibhas Saha, 2010. "Entry Threats and Inefficiency in ‘Efficient Bargaining’," Working Papers id:2833, eSocialSciences.
    7. Domenico Buccella & Luciano Fanti, 2024. "A theory of entry dissuasion," Bulletin of Economic Research, Wiley Blackwell, vol. 76(3), pages 666-684, July.
    8. Ohnishi, Kazuhiro, 2024. "A labor-managed Bertrand oligopoly game with lifetime employment as a strategic commitment," MPRA Paper 121486, University Library of Munich, Germany.
    9. Ohnishi, Kazuhiro, 2021. "Lifetime employment and reaction functions of socially concerned firms under quantity competition," MPRA Paper 110867, University Library of Munich, Germany.
    10. Kazuhiro Ohnishi, 2006. "Investment Decisions in a New Mixed Market," Annals of Economics and Finance, Society for AEF, vol. 7(2), pages 271-281, November.
    11. Kazuhiro Ohnishi, 2022. "Lifetime Employment and Stackelberg Mixed Duopoly Games with a Foreign Labour-Managed Competitor," Arthaniti: Journal of Economic Theory and Practice, , vol. 21(1), pages 27-42, June.
    12. Rupayan Pal & Bibhas Saha, 2010. "Entry Threats, and Inefficiency in ‘Efficient Bargaining’," Labor Economics Working Papers 23020, East Asian Bureau of Economic Research.
    13. Kazuhiro Ohnishi, 2012. "Quantity-setting games with lifetime employment contracts as a strategic commitment," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 49(2), pages 25-40, December.
    14. 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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