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Preference for the Leader/Follower Roles in a Mixed Duopoly

21 Pages Posted: 28 Mar 2011  

Ming Hsin Lin

Osaka University of Economics - Faculty of Economics

Date Written: October 21, 2006

Abstract

This paper investigates the preference for the Stackelberg leader/follower roles in a mixed duopoly, where a welfare-maximizing public firm competes with a profit-maximizing private firm. In contrast to the well known relationship in a private duopoly, we demonstrate that if a firm’s reaction function slopes upward, the firm will always prefer being the leader, whatever the slope of its rival’s reaction function. This holds not only for the public firm but also for the private firm. Furthermore, if both firms have downward-sloping reaction functions, then if one prefers to be the leader, the other must prefer to be the follower.

Keywords: Mixed duopoly, Stackelberg leader/follower, reaction function

JEL Classification: L00, D00

Suggested Citation

Lin, Ming Hsin, Preference for the Leader/Follower Roles in a Mixed Duopoly (October 21, 2006). Available at SSRN: https://ssrn.com/abstract=1793564 or http://dx.doi.org/10.2139/ssrn.1793564

Ming Hsin Lin (Contact Author)

Osaka University of Economics - Faculty of Economics ( email )

2-2-8 Osumi
Higashiyokogawa-ku
Osaka
Japan

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