Strategic Commitment and International Mixed Competition with Domestic State-owned and Foreign Labor-managed Firms

Kazuhiro Ohnishi

FinanzArchiv: Public Finance Analysis, 2008, vol. 64, issue 4, 458-472

Abstract: This paper examines an international mixed model in which a domestic state-owned welfare-maximizing public firm competes against a foreign labor-managed income-per-worker-maximizing private firm. In the first stage, each firm independently decides whether or not to make a commitment to capacity. This capacity may subsequently be increased, but cannot be reduced. Hence, the firm's capacity cost is sunk and changes from a variable cost to a fixed cost. In the second stage, each firm independently chooses its actual output. The paper shows the equilibrium of the international mixed model.

Keywords: international mixed duopoly; domestic state-owned firm; foreign labor-managed firm; strategic commitment (search for similar items in EconPapers)
JEL-codes: C72 D21 F23 H42 L30 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (4)

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DOI: 10.1628/001522108X397679

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