A THREE‐STAGE INTERNATIONAL MIXED DUOPOLY WITH A WAGE‐RISE CONTRACT AS A STRATEGIC COMMITMENT

Kazuhiro Ohnishi

Manchester School, 2010, vol. 78, issue 4, 279-289

Abstract: This paper examines international mixed competition, where one domestic social‐surplus‐maximizing public firm and one foreign profit‐maximizing private firm can adopt a wage‐rise contract as a strategic commitment. The paper considers the following three stages. In the first stage, the domestic public firm can offer the wage‐rise contract. In the second stage, the foreign private firm can offer the wage‐rise contract. In the third stage, both firms simultaneously and independently choose and sell their actual outputs. The equilibrium of the international mixed duopoly model is discussed.

Date: 2010
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