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STRATEGIC INVESTMENT IN A LABOUR‐MANAGED DUOPOLY
Author(s) -
Miyamoto Yoshinari
Publication year - 2010
Publication title -
bulletin of economic research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.227
H-Index - 29
eISSN - 1467-8586
pISSN - 0307-3378
DOI - 10.1111/j.1467-8586.2009.00321.x
Subject(s) - duopoly , economics , cournot competition , microeconomics , capital (architecture) , output elasticity , elasticity (physics) , function (biology) , investment (military) , production function , production (economics) , thermodynamics , physics , archaeology , evolutionary biology , biology , politics , political science , law , history
Developing a Cournot two‐stage game model with strategic capital interaction, we compare two different kinds of equilibrium in a labour‐managed (LM) duopoly. An LM firm's reaction function is negatively sloped when capital and output are simultaneously determined, while the slope of its reaction function in the second stage changes in sign depending on the magnitude of its labour‐expansion elasticity. Hence, whether the LM firms employ more capital and produce greater output at the equilibria in the two‐stage game model than at the equilibria resulting from the simultaneous selection of capital and output depends on the magnitude of their labour‐expansion elasticity.