corporate social responsibility and labor-managed duopoly with wage rise as strategic commitment

This paper investigates a duopoly game model in which two labor-managed firms compete in quantities. the game proceeds as follows. in the first stage, each labor-managed firm independently and simultaneously chooses the corporate social responsibility (csr) level. in the second stage, each labor-managed firm independently and simultaneously chooses whether or not to offer the wage-rise contract policy (wrcp) as a strategic commitment device. if a labor-managed firm offers wrcp, it decides an output level and a wage premium rate. in addition, the labor-managed firm agrees to pay each employee a wage premium uniformly, provided that it actually produces more than the chosen output. at the end of the game, each labor-managed firm independently and simultaneously chooses an actual output. first, the paper examines the reaction functions of labor-managed firms in the model and shows that the reaction functions of labor-managed firms are upward-sloping. next, this paper discusses the equilibrium of the model and shows that there is an equilibrium in which each labor-managed firm does not use csr as a business strategy.