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Strategic Investment In A Labour‐Managed Duopoly

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  • Yoshinari Miyamoto

Abstract

Developing a Cournot two‐stage game model with strategic capital interaction, we compare two different kinds of equilibrium in a labour‐managed (LM) duopoly. An LM firm's reaction function is negatively sloped when capital and output are simultaneously determined, while the slope of its reaction function in the second stage changes in sign depending on the magnitude of its labour‐expansion elasticity. Hence, whether the LM firms employ more capital and produce greater output at the equilibria in the two‐stage game model than at the equilibria resulting from the simultaneous selection of capital and output depends on the magnitude of their labour‐expansion elasticity.

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  • Yoshinari Miyamoto, 2010. "Strategic Investment In A Labour‐Managed Duopoly," Bulletin of Economic Research, Wiley Blackwell, vol. 62(4), pages 317-341, October.
    • Handle: RePEc:bla:buecrs:v:62:y:2010:i:4:p:317-341
    DOI: 10.1111/j.1467-8586.2009.00321.x
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