Capital Commitment and Cournot Competition with Labour‐managed and Profit‐maximising Firms

Luca Lambertini () and Gianpaolo Rossini

Australian Economic Papers, 1998, vol. 37, issue 1, 14-21

Abstract: The behaviour of labour managed and profit seeking firms in a Cournot duopoly with capital strategic interaction is analysed. When a pure labour managed duopoly is considered, firms choose their capital commitments according to the level of the interest rate, unlike what usually happens when only profit maximising firms operate in the market. If we consider a mixed duopoly, the profit maximising firm under‐invests while the labour managed firm over‐invests regardless of the rental cost of capital

Date: 1998
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