On the Effectiveness of the Lifetime-Employment-Contract Policy

Abstract

This paper examines a subgame perfect equilibrium when one of two duopolists executes a lifetime-employment-contract policy, which is a strategic commitment that generates kinks in the reaction curve, by using a two-stage quantity-setting model. The purpose of the paper is to show concretely in what kinds of cases the policy is effective. Copyright 2002 by Blackwell Publishers Ltd and The Victoria University of Manchester