Unilateral Decisions to Hire Managers in Markets with Capitalist and Labor-Managed Firms

This paper examines the equilibrium outcomes of firms’ decision games to hire managers when there is a capitalist firm competing against a labor-managed firm. The paper shows that if only the capitalist firm hires a manager, then the equilibrium coincides with the solution when neither firm hires a manager. In addition, the paper shows that if only the labor-managed firm hires a manager, then at equilibrium the capitalist firm’s output and the market price are lower than when neither firm hires a manager.