WAGE-RISE CONTRACT AND MIXED COURNOT DUOPOLY COMPETITION WITH PROFIT-MAXIMIZING AND SOCIALLY CONCERNED FIRMS

Abstract

This paper investigates a Cournot game model with a nonlinear demand function where a profit-maximizing firm competes against a socially concerned firm. The timing of the game is as follows. In stage one, each firm non-cooperatively decides whether to offer a wage-rise contract policy (WRCP) as a strategic commitment device. In stage two, after observing the rival’s decision in stage one, each firm non-cooperatively chooses its actual output. This paper presents the equilibrium solutions of the model.