Management objectives and strategic interactions among capitalist and labour-managed firms

It has recently been shown that the separation of ownership and control in a capitalist firm may not lead to a conflict of interests between managers and owners when there are oligopolistic interactions between firms. This paper introduces labour-managed firms into the picture. We show that when the labour-managed firm is involved the prospect of gains from managerial discretion under Cournot oligopoly may be replaced by an inevitable loss. In an entry deterrence framework on the other hand there is, once more, the possibility of mutual gains. The effect of strategic behaviour more generally may therefore depend upon firm organisation.