Lifetime employment and reaction functions of socially concerned firms under quantity competition

Ohnishi, Kazuhiro (2021): Lifetime employment and reaction functions of socially concerned firms under quantity competition.

Abstract

This paper considers a Cournot oligopoly game model with a concave demand function where socially concerned firms compete with each other. Each socially concerned firm maximizes its own profit plus a share of consumer surplus. The timing of the game is as follows. In the first stage, each socially concerned firm simultaneously and non-cooperatively chooses whether to offer lifetime employment as a strategic commitment device. If a firm offers lifetime employment, then it chooses an output level, employs the necessary number of employees to produce the output level chosen, and enters into a lifetime employment contract with all of the employees. In the second stage, each socially concerned firm simultaneously and non-cooperatively chooses its actual output. The paper presents the reaction functions of socially concerned firms in the Cournot oligopoly model. As a result of this analysis, the paper shows that the Cournot reaction functions of socially concerned firms may be upward-sloping.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cournot model; Corporate social responsibility; Lifetime employment; Oligopoly; Reaction function; Socially concerned firm
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General

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