Lifetime Employment and a Sequential Choice in a Mixed Duopoly Market with a Joint-Stock Firm

Document Type: Original Research

Author

Institute for Basic Economic Science, Osaka, Japan

Abstract

This paper examines a three-stage game model in which a joint-stock private firm and a state-owned public firm can sequentially offer lifetime employment before competing in quantities. The game runs as follows. First, the joint-stock private firm decides whether to offer lifetime employment. Second, the state-owned public firm decides whether to offer lifetime employment. Third, both firms choose their outputs simultaneously and independently. The paper demonstrates that there is an equilibrium solution where only the joint-stock private firm offers lifetime employment.

Keywords


Artz, B., Heywood, J. S., & McGinty, M. (2009). The merger paradox in a mixed oligopoly. Research in Economics, 63, 1-10.
Bárcena-Ruiz, J. C., & Garzón, M. B. (2003). Mixed duopoly, merger and multiproduct firms. Journal of Economics, 80, 27-42.
Barcena-Ruiz, J. C., & Garzón, M. B. (2007). Capacity choice in a mixed duopoly under price competition. Economics Bulletin, 12, 1-7.
Beladi, H., & Chao, C.-C. (2006). Does privatization improve the environment? Economics Letters, 93, 343-347.
Bös, D. (1986). Public enterprise economics. Amsterdam: North-Holland.
Bös, D. (2001). Privatization: A theoretical treatment. Oxford: Clarendon Press.
Chao, C.-C., & Yu, E. S. H. (2006). Partial privatization, foreign competition, and optimal tariff. Review of International Economics, 14, 87-92.
Cracau, D. (2015). The effect of strategic firm objectives on competition. In: Ohnishi, K. (Ed.), Firms’ Strategic Decisions: Theoretical and Empirical Findings, Volume 1 (pp. 170-181). Sharjah, UAE: Bentham Science Publishers.
Delbono, F., & Rossini, G. (1992). Competition policy vs horizontal merger with public entrepreneurial, and labor-managed firms. Journal of Comparative Economics, 16, 226-240.
Delbono, F., & Scarpa, C. (1995). Upward-sloping reaction functions under quantity competition in mixed oligopolies. Bulletin of Economic Research, 47, 341-346.
Fjell, K., & Heywood, J. S. (2002). Public Stackelberg leadership in a mixed oligopoly with foreign firms. Australian Economic Papers, 41, 267-281.
Fjell, K., & Pal, D. (1996). A mixed oligopoly in the presence of foreign private firms. Canadian Journal of Economics, 29, 737-743.
Furth, D., & Kovenock, D. (1993). Price leadership in a duopoly with capacity constraints and product differentiation. Journal of Economics, 57, 1-35.
George, K., & La Manna, M. (1996). Mixed duopoly, inefficiency, and public ownership. Review of Industrial Organization, 11, 853-860.
Hey, J. D. (1981). A unified theory of the behaviour of profit-maximising, labour-managed and joint-stock firms operating under uncertainty. Economic Journal, 91, 364-374.
Heywood, J. S., & Ye, G. (2010). Optimal privatization in a mixed duopoly with consistent conjectures. Journal of Economics, 101, 231-246.
Lu, Y. (2007). Endogenous timing in a mixed oligopoly consisting of a single public firm and foreign competitors. Economics Bulletin, 12, 1-7
Lu, Y., & Poddar, S. (2007). Firm ownership, product differentiation and welfare. The Manchester School, 75, 210-217.
Lu, Y., & Poddar, S. (2009). Endogenous timing in a mixed duopoly and private duopoly – ‘capacity-then-quantity’ game: the linear demand case. Australian Economic Papers, 48, 138-150.
Matsumura, T. (2003). Stackelberg mixed duopoly with a foreign competitor. Bulletin of Economic research, 55, 275-287.
Meade, J. E. (1972). The theory of labour-managed firms and of profit sharing. Economic Journal, 82, 402-428.
Merrill, W., & Schneider, N. (1966). Government firms in oligopoly industries: A short-run analysis. Quarterly Journal of Economics, 80, 400-412.
Mujumdar, S., & Pal, D. (1998). Effects of indirect taxation in a mixed oligopoly. Economics Letters, 58, 199-204.
Nett, L. (1993). Mixed oligopoly with homogeneous goods. Annals of Public and Cooperative Economics, 64, 367-393.
Nett, L. (1994). Why private firms are more innovative than public firms. European Journal of Political Economy, 10, 639-653.
Ohnishi, K. (2008a). International mixed duopoly and strategic commitments. International Economics and Economic Policy, 4, 421-432.
Ohnishi, K. (2008b). Strategic commitment and international mixed competition with domestic state-owned and foreign labor-managed firms. FinanzArchiv, 64, 458-472.
Ohnishi, K. (2009a). Capacity investment and mixed duopoly with state-owned and labor-managed firms. Annals of Economics and Finance, 10, 49-64.
Ohnishi, K. (2009b). Strategic commitment and three-stage games with labor-managed and profit-maximizing firms. Finnish Economic Papers, 22, 63-74.
Ohnishi, K. (2010). Lifetime employment contract and quantity competition with profit-maximizing and joint-stock firms. Journal of Institutional and Theoretical Economics, 166, 462-478.
Ohnishi, K. (2011). Lifetime employment and three-stage games with labour-managed and state-owned firms. Indian Economic Journal, 59, 3-17.
Ohnishi, K. (2012a). Price-setting mixed duopoly, privatization and subsidization. Microeconomics and Macroeconomics, 1, 20-23.
Ohnishi, K. (2012b). Endogenous timing in a quantity-setting mixed duopoly with state-owned and labor-managed firms. American Journal of Economics, 2, 82-86.
Ohnishi, K. (2014). Lifetime employment and endogenous timing in a mixed duopoly with profit-maximizing and joint-stock firms. Institutions and Economies, 6, 1-14.
Ohnishi, K. (2015). Lifetime employment and a three-stage model with state-owned and joint-stock firms. In: Ohnishi, K. (Ed.), Firms’ Strategic Decisions: Theoretical and Empirical Findings, Volume 1 (pp. 155-169). Sharjah, UAE: Bentham Science Publishers.
Ohnishi, K. (2016). Capacity and reaction functions of joint-stock firms. International Journal of Management, Accounting and Economics, forthcoming.
Pal, D. (1998). Endogenous timing in a mixed oligopoly. Economics Letters, 61, 181-185.
Pal, D., & Saha, B. (2014). Mixed duopoly and environment. Journal of Public Economic Theory, 16, 96-118.
Pal, D., & White, M. D. (1998). Mixed oligopoly, privatization, and strategic trade policy. Southern Economic Journal, 65, 264-281.
Poyago-Theotoky, J. (1998). R&D competition in a mixed duopoly under uncertainty and easy imitation. Journal of Comparative Economics, 26, 415-428.
Roy chowdhury, P. (2009). Mixed oligopoly with distortions: First best with budget-balance and the irrelevance principle. Economics Bulletin, 29, 1885-1900.
Saha B., & Sensarma, R. (2008). The distributive role of managerial incentives in a mixed duopoly. Economics Bulletin, 12, 1-10.
Vickers, J., & Yarrow, G. (1988). Privatization: An economic analysis. Cambridge, MA: MIT Press.
Wang, L. F. S., & Lee, J. Y. (2010). Partial privatization, foreign competition, and tariffs ranking. Economics Bulletin, 30, 2405-2012.
Wang, L. F. S., & Wang, J. (2009). Environmental taxes in a differentiated mixed duopoly. Economic Systems, 33, 389-396.
Ware, R. (1986). A model of public enterprise with entry. Canadian Journal Economics, 19, 642-655.
Wen, M., & Sasaki, D. (2001). Would excess capacity in public firms be socially optimal? Economic Record, 77, 283-290.
White, M. D. (1996). Mixed oligopoly, privatization and subsidization. Economics Letters, 53, 189-195.
Willner, J. (1994). Welfare maximization with endogenous average costs. International Journal of Industrial Organization, 12, 373-386.