A Three-Stage Labour-Managed Cournot Duopoly with Lifetime Employment as a Strategic Commitment

This paper studies the effectiveness of lifetime employment as a strategic commitment in a three-stage Cournot model with two identical labour-managed income-per-worker-maximizing firms. In the first stage, one labour-managed firm is allowed to offer lifetime employment. In the second stage, the other labour-managed firm is allowed to offer lifetime employment. In the third stage, both firms simultaneously and independently choose and sell actual outputs. The paper then finds that the introduction of lifetime employment into the analysis of the quantity-setting labour-managed duopoly model is profitable for both firms