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Strategic Commitment and Three-Stage Games with Labour-Managed and Profit-Maximizing Firms

Kazuhiro Ohnishi ()
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Kazuhiro Ohnishi: Osaka University

Finnish Economic Papers, 2009, vol. 22, issue 2, 63-74

Abstract: This paper examines two three-stage games with a labor-managed income-perworker- maximizing firm and a profit-maximizing firm. In the first stage, the labormanaged firm (resp. the profit-maximizing firm) decides whether to make a commitment to capacity. In the second stage, the other firm decides on a commitment to capacity. In the third stage, both firms non-cooperatively choose quantities. The paper shows the equilibrium outcomes of the two three-stage games. The paper then finds that the introduction of capacity commitment into the analysis of threestage mixed market games is profitable for the labor-managed firm while it is not profitable for the profit-maximizing firm.

JEL-codes: C72 D21 L20 (search for similar items in EconPapers)
Date: 2009
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Handle: RePEc:fep:journl:v:22:y:2009:i:2:p:63-74