This chapter investigates a mixed duopoly model where a joint-stock firm
and a state-owned firm are allowed to offer lifetime employment as a strategic
commitment. The chapter considers the following situation. First, the state-owned firm
chooses whether to provide lifetime employment or not. Second, the joint-stock firm
chooses whether to provide lifetime employment or not. Third, each firm sets its actual
quantity simultaneously and independently. The chapter presents the equilibrium
solution of the mixed market model. As a result of this, it is suggested that introducing
lifetime employment into the model of quantity-setting mixed duopoly is beneficial for
the state-owned firm.
Keywords: Cournot competition, income per capital, joint-stock firm, lifetime
employment, mixed duopoly, perfectly substitutable goods, economic welfare,
state-owned firm, strategic commitment, three-stage model.
