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Quantity-setting games with lifetime employment contracts as a strategic commitment

Author

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  • Kazuhiro Ohnishi

    (Institute for Basic Economic Science, Japan)

Abstract

This paper considers lifetime employment contracts asa strategic commitment and examines the respectiveequilibrium outcomes of the two cases of a quantity-setting duopoly game with substitute goods and a quantity-setting duopoly game with complementary goods. First, in the quantity-setting game with substitute goods, we Þnd that there is an equilibrium in which both the firms adopt lifetime employment. Next, in the quantity-setting game withcomplementary goods, we Þnd that there is an equilibrium in which at least one Þrm adopts lifetime employment, and that lifetime employment is beneÞcial for both Þrms.

Suggested Citation

  • 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.
    • Handle: RePEc:phs:prejrn:v:49:y:2012:i:2:p:25-40
    as

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    File URL: http://pre.econ.upd.edu.ph/index.php/pre/article/view/884/783
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    References listed on IDEAS

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    More about this item

    Keywords

    quantity-setting model; substitute goods; complementary goods; lifetime employment contract;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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