Spatial competition with profit‐maximising and labour‐managed firms

Abstract

The nature of the equilibria arising under spatial differentiation is investigated here in a duopoly model, where at least one firm maximises value added per worker. The study shows that if firms' objectives differ, there exists a subgame perfect equilibrium in pure strategies, which is possibly characterised by asymmetric locations. If both firms are labour-managed, there exists a (symmetric) subgame perfect equilibrium in pure strategies with firms located at the first and third quartiles, if and only if the setup cost is low enough. Otherwise, undercutting is profitable. JEL classification: D43, L13

Lifetime Employment and a Mixed Duopoly with a Foreign Labour-Managed Firm

“…There are also numerous other published papers (see, e.g. Law and Stewart, 1983;Mai and Hwang, 1989;Horowitz, 1991;Okuguchi, 1991;Stewart, 1992;Askildsen and Ireland, 1993;Ireland and Stewart, 1995;Futagami and Okamura, 1996;Lambertini, 1997Lambertini, , 2001Neary and Ulph, 1997;Okamura and Futagami, 1997;Cuccia and Cellini, 2009;Luo, 2013;Kalashnikov et al, 2015). All these papers focus on mixed oligopoly markets where labour-managed firms compete against profit-maximizing capitalist firms, and do not include state-owned public firms.…”

Capacity Choice in an International Mixed Triopoly

“…In addition, Ohnishi (2008) clarifies the behaviors of a labor-managed firm and a capitalist firm in a quantity-setting model with a strategic commitment, and shows that the introduction of capacity investment into the analysis of the mixed duopoly model may be effective for the labor-managed firm. There are also a great number of papers (for example, see Law and Stewart, 1983;Horowitz, 1991;Stewart, 1992;Askildsen and Ireland, 1993;Ireland and Stewart, 1995;Okamura and Futagami, 1998;Lambertini, 2001;Ireland, 2003;Cuccia and Cellini, 2009;Luo, 2013;Delbono and Lambertini, 2017). All these researches investigate mixed oligopoly markets where labor-managed firms compete against capitalist firms.…”

Wage‐rise Contract and Quantity Competition With Profit‐maximizing and Labour‐managed Firms

“…They show that there is no point in the wage/fixed cost parameter set at which the two firms in mixed equilibrium can simultaneously make zero profits. Lambertini (2001) investigates a spatial duopoly model where at least one firm maximizes the value added per worker and shows that if firms’ objectives differ, there exists a subgame perfect equilibrium in pure strategies, which is possibly characterized by asymmetric locations. There are also many other excellent studies such as Laffont and Moreaux (1985), Mai and Hwang (1989), Horowitz (1991), Cremer and Crémer (1992), Delbono and Rossini (1992), Stewart (1991), Askildsen and Ireland (1993), Futagami and Okamura (1996), Lambertini and Rossini (1998) and Ireland (2003).…”