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 model with a concave demand function where socially concerned firms compete. Each socially concerned firm maximises its profit plus a share of consumer surplus. The timing of the game is as follows. In stage one, each socially concerned firm simultaneously and non-cooperatively chooses whether to offer lifetime employment as a strategic commitment device. In stage two, 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. The results of the paper can be summarised as follows. (i) If firms are less willing to undertake socially responsible actions, their reaction functions are downward-sloping. (ii) If firms have more social responsibility, their reaction functions are upward-sloping. (iii) The slope of the reaction functions is gentler when socially concerned firms offer lifetime employment compared to when they do not.

• Item Type: MPRA Paper
• Language: English
• Keywords: Cournot model; Corporate social responsibility; Lifetime employment; 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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