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Lifetime Employment Contract and Quantity Competition with Profit-Maximizing and Joint-Stock Firms

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  • Kazuhiro Ohnishi

Abstract

This paper studies two-stage Cournot duopoly competition with a profit-maximizing firm and a joint-stock income-per-unit-of-capital-maximizing firm. In the first stage, each firm noncooperatively decides whether to offer lifetime employment as a strategic commitment. In the second stage, both firms noncooperatively choose actual outputs. The paper shows the equilibrium outcome of the mixed model and finds that the introduction of lifetime employment into the analysis of Cournot mixed competition is profitable only for the joint-stock firm. Furthermore, the paper examines interactions between an incumbent and a potential entrant as well as a pair of established firms.

Suggested Citation

  • Kazuhiro Ohnishi, 2010. "Lifetime Employment Contract and Quantity Competition with Profit-Maximizing and Joint-Stock Firms," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(3), pages 462-478, September.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(201009)166:3_462:lecaqc_2.0.tx_2-w
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    References listed on IDEAS

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    1. Dixit, Avinash, 1980. "The Role of Investment in Entry-Deterrence," Economic Journal, Royal Economic Society, vol. 90(357), pages 95-106, March.
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    4. Dow,Gregory K., 2003. "Governing the Firm," Cambridge Books, Cambridge University Press, number 9780521522212, October.
    5. Hashimoto, Masanori & Raisian, John, 1985. "Employment Tenure and Earnings Profiles in Japan and the United States," American Economic Review, American Economic Association, vol. 75(4), pages 721-735, September.
    6. 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.
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    Citations

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    Cited by:

    1. Kazuhiro Ohnishi, 2014. "Sequential Mixed Competition with a Foreign Joint-stock Firm," International Journal of Social Sciences and Management Studies (IJSSMS), The Economics and Social Development Organization (TESDO), vol. 1(2), pages 38-52, June.
    2. Ohnishi, Kazuhiro, 2018. "Inventory Holding and a Mixed Duopoly with a Foreign Joint-Stock Firm," MPRA Paper 88223, University Library of Munich, Germany.
    3. Ohnishi, Kazuhiro, 2022. "Wage-rise contract and mixed Cournot duopoly competition with profit-maximizing and socially concerned firms," MPRA Paper 112536, University Library of Munich, Germany.
    4. Ohnishi, Kazuhiro, 2021. "The environmental effect of ambient charges in mixed triopoly with diverse firm objectives," MPRA Paper 108521, University Library of Munich, Germany.
    5. Ohnishi, Kazuhiro, 2021. "Lifetime employment and reaction functions of socially concerned firms under quantity competition," MPRA Paper 110867, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General

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