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Optimal policy mix in an endogenous timing with a consumer-friendly public firm

Author

Listed:
  • Arturo Garcia

    (Technologico de Monterrey, Mexico)

  • Mariel Leal

    (Technologico de Monterrey, Mexico)

  • Sang-Ho Lee

    (Chonnam National University, South Korea)

Abstract

This study considers a mixed duopoly with a consumer-friendly public firm and analyzes an endogenous timing game in the presence of output subsidy and emission tax. We find that regardless of the policy mix, the equilibrium of endogenous market structure is determined by the public firm's concern on consumer surplus. We also show that the optimal policy mix can attain the first-best allocation for social welfare only when both firms have symmetric payoffs, which results in simultaneous-move outcome.

Suggested Citation

  • Arturo Garcia & Mariel Leal & Sang-Ho Lee, 2018. "Optimal policy mix in an endogenous timing with a consumer-friendly public firm," Economics Bulletin, AccessEcon, vol. 38(3), pages 1438-1445.
    • Handle: RePEc:ebl:ecbull:eb-18-00513
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2018/Volume38/EB-18-V38-I3-P135.pdf
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    References listed on IDEAS

    as
    1. Lee, Sang-Ho & Muminov, Timur K. & Tomaru, Yoshihiro, 2017. "Partial Privatization And Subsidization In A Mixed Duopoly: R&D Versus Output Subsidies," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 58(2), pages 163-177, December.
    2. Toshihiro Matsumura & Makoto Okamura, 2015. "Competition and privatization policies revisited: the payoff interdependence approach," Journal of Economics, Springer, vol. 116(2), pages 137-150, October.
    3. repec:wly:soecon:v:82:2:y:2015:p:416-429 is not listed on IDEAS
    4. Xu, Lili & Cho, Sumi & Lee, Sang-Ho, 2016. "Emission tax and optimal privatization in Cournot–Bertrand comparison," Economic Modelling, Elsevier, vol. 55(C), pages 73-82.
    5. Yoshihiro Tomaru & Kazuharu Kiyono, 2010. "Endogenous Timing in Mixed Duopoly with Increasing Marginal Costs," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(4), pages 591-613, December.
    6. Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(2), pages 264-281, October.
    7. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    8. Lee, Sang-Ho & Tomaru, Yoshihiro, 2017. "Output and R&D subsidies in a mixed oligopoly," MPRA Paper 84410, University Library of Munich, Germany.
    9. White, Mark D., 1996. "Mixed oligopoly, privatization and subsidization," Economics Letters, Elsevier, vol. 53(2), pages 189-195, November.
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    11. Toshihiro Matsumura & Yoshihiro Tomaru, 2013. "Mixed duopoly, privatization, and subsidization with excess burden of taxation," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 46(2), pages 526-554, May.
    12. Matsumura, Toshihiro & Matsushima, Noriaki & Cato, Susumu, 2013. "Competitiveness and R&D competition revisited," Economic Modelling, Elsevier, vol. 31(C), pages 541-547.
    13. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
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    15. Matsumura, Toshihiro & Okumura, Yasunori, 2013. "Privatization neutrality theorem revisited," Economics Letters, Elsevier, vol. 118(2), pages 324-326.
    16. Susumu Cato & Toshihiro Matsumura, 2013. "Long-Run Effects of Tax Policies in a Mixed Market," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 69(2), pages 215-240, June.
    17. Yoshihiro Tomaru & Masayuki Saito, 2010. "Mixed Duopoly, Privatization And Subsidization In An Endogenous Timing Framework," Manchester School, University of Manchester, vol. 78(1), pages 41-59, January.
    18. Sang-Ho Lee, 1998. "R&D Spillovers, Technology Cartel, and Monopoly Regulation," International Economic Journal, Taylor & Francis Journals, vol. 12(3), pages 77-88.
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    Cited by:

    1. Hao Xu & Ming Luo, 2022. "Optimal Environmental Policy in a Dynamic Transboundary Pollution Game: Emission Standards, Taxes, and Permit Trading," Sustainability, MDPI, vol. 14(15), pages 1-25, July.
    2. Delbono, Flavio & Lanzi, Diego & Reggiani, Carlo, 2023. "Workers’ firm in mixed duopoly," Economic Modelling, Elsevier, vol. 122(C).

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    More about this item

    Keywords

    endogenous timing game; consumer-friendly public firm; emission tax; output subsidy;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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