Lifetime Employment Contracts Could Boost Profits for Firms with Complementary Goods
The article examines how companies can use long-term employment contracts to strengthen their position in markets where businesses sell products that go together well. It looks at scenarios where firms compete either by setting prices or quantities. By analyzing these different situations, the article concludes that having lifetime job agreements can help companies do better, especially when their products work better together and the competition is fierce. In simpler terms, the research suggests that businesses may benefit from making commitments to long-term employment arrangements, especially when their products rely on each other and they face tough competition.