Endougenous Timing in a Mixed Duopoly

University of Pavia, Department of Economics and Quantitative Methods - Quaderni di Dipartimento No. 162

34 Pages Posted: 24 Nov 2013

See all articles by Rabah Amir

Rabah Amir

University of Arizona - Department of Economics; University of Arizona

Giuseppe De Feo

University of Strathclyde, Glasgow - Strathclyde Business School - Department of Economics; University of Pavia - Department of Political Economy and Quantitative Methods

Date Written: February 1, 2012

Abstract

This paper applies the framework of endogenous timing in games to mixed quantity duopoly, wherein a private – domestic or foreign – firm competes with a public, welfare maximizing firm. We show that simultaneous play never emerges as a subgame-perfect equilibrium of the extended game, in sharp contrast to private duopoly games. We provide sufficient conditions for the emergence of public and/or private leadership equilibrium. In all cases, private profits and social welfare are higher than under the corresponding Cournot equilibrium. From a methodological viewpoint we make extensive use of the basic results from the theory of supermodular games in order to avoid common extraneous assumptions such as concavity, existence and uniqueness of the different equilibria, whenever possible. Some policy implications are drawn, in particular those relating to the merits of privatization.

Keywords: Mixed markets, endogenous timing, Cournot equilibrium, Stackelberg equilibrium, privatization

JEL Classification: C72, D43, H42, L13

Suggested Citation

Amir, Rabah and De Feo, Giuseppe, Endougenous Timing in a Mixed Duopoly (February 1, 2012). University of Pavia, Department of Economics and Quantitative Methods - Quaderni di Dipartimento No. 162. Available at SSRN: https://ssrn.com/abstract=2358698 or http://dx.doi.org/10.2139/ssrn.2358698

Rabah Amir

University of Arizona - Department of Economics ( email )

Tucson, AZ 85721
United States

University of Arizona ( email )

Department of History
Tucson, AZ 85721
United States

Giuseppe De Feo (Contact Author)

University of Strathclyde, Glasgow - Strathclyde Business School - Department of Economics ( email )

Sir William Duncan Building
130 Rottenrow
Glasgow, G4 0GE
United Kingdom
+44 (0)141 548 4075 (Phone)

HOME PAGE: http://www.strath.ac.uk/economics/staff/defeogiuseppedr/

University of Pavia - Department of Political Economy and Quantitative Methods ( email )

27100 Pavia
Italy

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