Are Labor-Managed Firms Really Able to Survive Competition With Profit-Maximizing Firms?

Lambertini, Luca ; Rossini, Gianpaolo (1995) Are Labor-Managed Firms Really Able to Survive Competition With Profit-Maximizing Firms? Bologna: Dipartimento di Scienze economiche DSE, p. 17. DOI 10.6092/unibo/amsacta/5094. In: Quaderni - Working Paper DSE (222). ISSN 2282-6483.
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Abstract

The behaviour of labor managed and profit seeking firms in a Cournot duopoly with capital strategic interaction is analysed. Whena pure labor managed duopoly is considered, firms choose their capital commitments according to the level of the interest rate, unlike what usually happens when only profit maximizing firms operate in the market. If we consider a mixed duopoly, the profit maximizing firm underinvests as a reaction to the strategic asymmetry characterizing competition in the quantity stage regardless of the rental cost of capital, while the investment decision taken by the labor managed firm is again affected by the cost of capital. The nature of competition between a PM and an LM firm is such that the LM firm is induced to set her own capital in such a way that she does not enter the market.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Lambertini, Luca
Rossini, Gianpaolo
Keywords
capital commitment, labor managed firm
Subjects
ISSN
2282-6483
DOI
Deposit date
28 Apr 2016 09:32
Last modified
28 Apr 2016 09:32
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