A THREE-STAGE INTERNATIONAL MIXED DUOPOLY WITH A WAGE-RISE CONTRACT AS A STRATEGIC COMMITMENT

This paper examines international mixed competition, where one domestic social-surplus-maximizing public firm and one foreign profit-maximizing private firm can adopt a wage-rise contract as a strategic commitment. The paper considers the following three stages. In the first stage, the domestic public firm can offer the wage-rise contract. In the second stage, the foreign private firm can offer the wage-rise contract. In the third stage, both firms simultaneously and independently choose and sell their actual outputs. The equilibrium of the international mixed duopoly model is discussed.