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Labor Investment in a New International Mixed Market

DOI: 10.4236/ti.2010.12017, PP. 143-148

Keywords: Lifetime Employment Contract, Continuous-Time Dynamic Model, Domestic Public Firm, Foreign Private Firm

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Abstract:

This paper considers a continuous-time dynamic mixed market model of labor investment decisions of a domestic public firm and a foreign private firm. The paper studies the optimal levels of preemptive investment for the long-run structure of the international mixed market. It is then demonstrated that there are no perfect equilibria in which neither firm invests to its steady-state reaction curve.

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