Workers’ firm in mixed duopoly

Cooperatives, including those owned and run by workers (Workers Firms, WFs), compete with capitalist firms in oligopolistic industries (mixed oligopolies). We rationalize several facts emerging from the empirical research as: The concern of WFs for their employment; the interplay between membership and workplace safeguard within WFs; the different reaction to shocks between WFs and capitalist enterprises. We do so by means of a new model of WFs’ short-run behavior in a mixed duopoly. We innovate in modeling the WF’s objective function by including both profits and employment, and characterize the resulting Nash equilibrium. •In real industries workers’ firms compete with capitalist companies.•A workers’ firm maximizes a combination of profits and employment.•Consumers benefit from the presence of such a workers’ firm’s behavior.•The workers’ firm may make more profit than the capitalist one.•During downturns the workers’ firm can sacrifice profits to safeguard employment.