Mixed Duopoly,Merger and Multiproduct Firms

The literature on mergers has extensively analyzed the decision to merge by private firms, but it has not considered the decision to merge by private and public firms. We assume that when a private firm and a public firm merge (or when one of them acquires the other), they set up a multiproduct firm in which the government owns an exogenous percentage stake. In this framework, we show that the decision to merge by firms depends on the degree to which goods are substitutes and on the percentage of the shares owned by the government in the multiproduct firm.     

A Mixed Duopoly With Switching Costs

We examine the effects of switching costs in a two‐period Hotelling‐type model where a profit‐maximising private firm competes with a welfare‐maximising public firm. We show that, in contrast with the case in which both firms are private, where switching costs raise prices in both periods, in the mixed duopoly they raise prices in the second period but reduce them in the first period. Moreover, the first‐period price reduction is of such magnitude that switching costs reduce firms’ profits and raise consumer welfare. We also find that switching costs affect the consequences of privatisation in favour of firms and against consumers.     

Stackelberg Mixed Duopoly with a Foreign Competitor

We investigate Stackelberg mixed duopoly models where a state‐owned public firm and a foreign private firm compete. We examine a desirable role (either leader or follower) of the public firm. We also consider endogenous roles by adopting the observable delay game of Hamilton and Slutsky (1990). We find that, in contrast to Pal (1998) discussing a case of domestic competitors, the public firm should be the leader and that it becomes the leader in the endogenous role game. We also find that in contrast to Ono (1990) eliminating a foreign firm does not improve domestic welfare in mixed oligopolies.     

Endogenous Timing in a Mixed Duopoly: Price Competition

The endogenous order of moves is analyzed in a mixed duopoly for differentiated goods, where firms choose whether to set prices sequentially or simultaneously. It is shown that, in contrast to the private duopoly where firms set prices sequentially, in the mixed duopoly firms choose prices simultaneously. Moreover, the result obtained in the mixed duopoly under price competition differs from the one under quantity competition, since in the latter case decisions are taken sequentially.      

R&D Strategy in International Mixed Duopoly with Research Spillovers

This paper examines the international mixed duopoly behaviour with research spillovers. Using a two‐stage game with Research and Development (R&D) and output, we investigate the effects of imperfectly appropriable R&D on optimal R&D strategies of a domestic public firm and a foreign private firm across different market interactions: (i) international R&D competition, (ii) only the foreign firm conducts R&D, (iii) only the domestic public firm conducts R&D, (iv) no firm conducts R&D, and (v) research joint venture. The results show that firms' research performances are determined by the degree of spillovers and the optimal R&D strategies involve R&D competition. Spillovers are shown to be socially beneficial and their absence can prove to be a strategic deterrent, with the public firm monopolising the market. Some of these findings contrast with the traditional models of oligopoly (with or without R&D) and mixed oligopoly (without R&D).     

The Optimal Privatization Policies under an International Mixed Duopoly

This paper explores the socially optimal privatization policies under the setting of international mixed duopoly. We find that partial privatization is socially optimal under Cournot competition and private leadership competition, whereas full nationalization is socially optimal under public leadership competition. Moreover, the equilibrium social welfare under private leadership competition is higher than that observed under Cournot competition and that observed under private leadership competition, which differs from the findings of Matsumura ( 2003b ). We also show that the endogenous timing game has a subgame perfect Nash equilibrium outcome, under which the government chooses a partial privatization policy, and private leadership competition emerges as the optimal output decision sequence of firms. An important policy implication from this paper is that the government should partially privatize the public firm and facilitate the emergence of private leadership competition in an international mixed market.     

Mixed Duopoly with Product Differentiation: Sequential Choice of Location

We investigate the sequential choice of location in a mixed duopoly, where a welfare–maximising public firm competes against a profit–maximising private firm. We examine the desirable role of the public firm in a mixed market. We also consider the effect of price regulation. We find that the public firm should become the follower (leader) if a price regulation is (is not) imposed. We also find that neither price regulation nor privatisation of the public firm improves welfare.     

Organizational Structure and the Choice of Price versus Quantity in a Mixed Duopoly

We consider the choice of price/quantity of a public and a private firm in a mixed differentiated duopoly. First, we study the way in which the strategic choice of the market variable is affected by different given organizational structures (managerial or entrepreneurial) of the public and the private firm. Second, we investigate how the price/quantity choice interacts with the endogenous choice of the organizational structure, thus determining a subgame perfect equilibrium at which firms choose to behave as price‐setters and to adopt a managerial structure.     

最优关税和部分私有化战略-产品差异的混合寡头模型

本文通过构建一个双寡头垄断竞争的博弈模型,探讨了存在产品差异的混合寡头市场(mixed oligopoly)中,国内外企业的产品差异程度和公有企业私有化程度对最优关税的影响。研究结果表明:无论政府以收入极大化还是福利极大化为目标,其制定的关税税率都应随着私有化程度和产品差异程度的提高而提高,政府福利目标与关税收入目标都与产品差异程度成正比。与最近的其他研究发现不同,在不存在私有化或者当私有化程度相对较低而差异程度相对较高时,收入极大化关税税率总是高于福利极大化关税税率。同时本文还得出,福利极大化下的社会最优私有化比例总是大于关税收入极大化的社会最优私有化比例。因此,以社会福利极大化为目标的政府比以关税收入极大化为目标的政府更加倾向于私有化本国的公有企业。     

最优关税和部分私有化战略-产品差异的混合寡头模型

本文通过构建一个双寡头垄断竞争的博弈模型,探讨了存在产品差异的混合寡头市场(mixed oligopoly)中,国内外企业的产品差异程度和公有企业私有化程度对最优关税的影响.研究结果表明:无论政府以收入极大化还是福利极大化为目标,其制定的关税税率都应随着私有化程度和产品差异程度的提高而提高,政府福利目标与关税收入目标都与产品差异程度成正比.与最近的其他研究发现不同,在不存在私有化或者当私有化程度相对较低而差异程度相对较高时,收入极大化关税税率总是高于福利极大化关税税率.同时本文还得出,福利极大化下的社会最优私有化比例总是大干关税收入极大化的社会最优私有化比例.因此,以社会福利极大化为目标的政府比以关税收入极大化为目标的政府更加倾向于私有化本国的公有企业.     

Mixed Market Competition in a Quality Differentiated Duopoly Model An Approach to Banking Sector

This paper attempts to develop a theoretical framework to investigate the competitive implications of quality choices of financial institutions whereby they charge prices to consumers based on their willingness to pay for the service qualities in the mixed market scenario under vertical product differentiation model. Initially, it analyzes benchmark equilibrium solutions of monopoly and duopoly to establish the degree of quality differentiation between two private banks in an uncover market configuration. Further, it estimates the quality differentiation between private and public banks, and examines the interaction between two market structures keeping public bank as both leader and follower, and then measures the social welfare from different prospectives. The explicit operation of two stages Nash equilibrium game forecasted that public banks＇ monopoly seems to be still better than a private banking, and it is socially optimal. The outcome demonstrates a significant importance of vertical quality differentiation for policy implication in banking industry and provides an insight on the reasons of particular co-existence of public and private banking services in the specified location. In this context, it is concluded that the presence of public banks in banking industries is a crucial condition for obtaining the higher range of social welfare.     

Endogenous Choice of Strategic Contracts in a Mixed Duopoly with Bargaining Over Managerial Delegation Contracts

We revisit the endogenous choice problem of strategic contracts for the public firm and the private firm in a managerial mixed duopoly with differentiated goods. We consider the situation wherein the managerial delegation contracts are determined by maximising social welfare within the public firm, which is equal to the objective function of its owner, and through bargaining over the content of managerial delegation contracts between the owner and manager within the private firm. We show that, in equilibrium, when the manager of the private firm has high bargaining power relative to that of the owner, the public firm chooses a price contract, while the private firm chooses a quantity contract. However, there is no equilibrium market structure under the pure strategic contract class when the manager has sufficiently low bargaining power relative to that of the owner.     

Duopoly signal jamming

Summary This paper examines a repeated duopoly market with heterogeneous outputs. Firms have (common) prior beliefs over the values of an unknown parameter of each firm's demand curve. Firms cannot observe rivals' quantities, but can observe market prices, which are subject to random disturbances and hence provide noisy information that firms use to update their beliefs concerning the unknown parameters' values. Each firm can potentially signal jam, or strategically vary its output level in order to manipulate the distribution of likely market prices and hence the likely inferences drawn by the opponent. We find that the opportunity to signal-jam introduces two conflicting effects, arising out of the desire to manipulate expectations concerning each of the two demand curves. Depending upon the relative magnitudes of these two effects, signal-jamming may lead firms to either increase or decrease period-one quantities. If the firms are symmetric, then the opportunity to signal jam induces both firms to increase output in order to induce their rival to conclude that demand is unfavorable. However, if the firms believe almost surely that one of the possible parameter values is true for firm 2's demand curve (for example), then firm 1 may signal-jam by producing less output.We thank two anonymous referees, an associate editor and Pieter Kop Jansen for helpful comments that corrected some errors. Larry Samuelson is grateful to the Center for Economic Research at Tilburg University and the Department of Economics at the University of Bonn for support. Financial support by the Deutsche Forschungsgemeinschaft (DFG) through Sonderforschungsbereich 303 is gratefully acknowledged.     

Duopoly pricing and waiting lines

The paper deals with a model of duopoly pricing in the context of firms providing services to consumers. Each of the firms has a waiting line of customers arriving randomly. The service provided by both firms is identical and the service time of both firms is assumed to obey the same distribution. Different consumers have different time costs and have to decide whether or not to join one of the lines. It is shown that the Cournot-Nash equilibrium is such that the two firms charge in general different prices. One of the firms specializes in servicing individuals with high cost of time (and the other the rest). Moreover, some examples of non-existence of Cournot-Nash equilibrium and permanent oscillations of prices are shown.     

Quality and Welfare in a Mixed Duopoly with Regulated Prices: The Case of a Public and a Private Hospital

Abstract. Hospital markets are often characterized by price regulation and the existence of different ownership types. Using a Hotelling framework, this paper analyses the effect of heterogeneous objectives of hospitals on quality differentiation, profits and overall welfare in a price‐regulated duopoly with exogenous symmetric locations. In contrast to other studies on mixed duopolies, this paper shows that, in this framework, privatization of the public hospital may increase overall welfare. This holds if the public hospital is similar to the private hospital or less efficient and competition is low. The main driving force is the single‐regulated price which induces under‐provision (over‐provision) of quality of the more (less) efficient hospital compared with the first best. However, if the public hospital is sufficiently more efficient and competition is fierce, a mixed duopoly outperforms both a private and a public duopoly due to an equilibrium price below (above) the price of the private (public) duopoly. This medium price discourages over‐provision of quality of the less efficient hospital and – together with the non‐profit objective – encourages an increase in quality of the more efficient public hospital.     

Bowley Duopoly Under Vertical Relations

Compared to the well‐known oligopoly models such as those of Cournot, the so‐called Bowley duopoly is less known, and almost ignored in the literature. This neglect reflects the assumption that as a leader–leader model incorporating apparent excess rivalry it is presumably untenable, at least in theory. However, it is, in fact, observable in practice. Furthermore, the predicted excess competition is not only observable empirically but also accountable theoretically. We show how excess competition emerges when an upstream monopolist offers the downstream retailers a compensated game in which each acts as a leader. The outcome is not only stable but also benefits all involved actors, including consumers under vertically‐related markets, such as those presided over by a monopolist producer. This result of emergent stability shows that the Bowley duopoly should be considered alongside other oligopoly models.     

The Chamberlin and Stackelberg Duopoly Relation*

The paper investigates and identifies an important relationship between the Chamberlin and Stackelberg duopoly models. Under conditions of symmetry, linear demand and constant costs, the two iso-profit curves identifying the Stackelberg leadership points are shown to be tangent at the Chamberlin point. Under these conditions profit-maximising duopolists are indifferent to being Stackelberg output leaders and coalescing in an equal-shares-joint-monopoly solution. This result is shown to be sensitive to the constant cost and linear assumptions. Under increasing linear marginal costs, the joint monopoly solution is preferred by both sellers to a leader-follower solution.     

Delegation and Information Sharing in Cournot Duopoly

Information sharing in oligopoly has been analyzed by assuming that firms behave as a sole economic agent. In this paper it is assumed that ownership and management are separated. Contrary to the classical result of information sharing in a Cournot duopoly with private cost information, the paper shows that information sharing is no longer always a dominant strategy and expected consumer surplus is no longer always decreased. The paper determines the circumstances under which information is exchanged and analyzes its welfare consequences.      

Technical Improvements and Welfare under International Duopoly

It is now common wisdom that a free-trading country with perfectly competitive markets might be hurt by its own technical improvement of that country's export industry, and that an improvement in the import-competing industry never impoverishes the country if no commodity is inferior for that country. This paper examines the welfare effects of technical progress in a perfectly competitive industry and in an internationally duopolistic market in a two-country, two-good, one-factor trading model. It will be shown that the above propositions are severely qualified in our setting with duopolistic industry.     

Perpetual Leapfrogging in Bertrand Duopoly

We consider different patterns of infinite technological adoption choices by firms in a Bertrand duopoly. Every period technological progress provides a sequence of cost reducing innovations. The equilibrium concept is Markov perfect equilibrium. We analyze conditions for which equilibrium adoption leads to persistent leadership and those where firms alternate in adoption inducing leapfrogging. Only leapfrogging leads to technological improvement in the long run. Demand conditions play a crucial role in determining whether leapfrogging can be perpetual in Bertrand duopoly.