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Mixed duopoly in price competition under the optimal privatization rate

Author

Listed:
  • Kojun Hamada

    (Faculty of Economics, Niigata University)

Abstract

This study examines social welfare in a mixed duopoly in differentiated products in which a partially privatized firm and a private firm simultaneously or sequentially compete in price after the government sets the optimal degree of privatization for the partially privatized firm. Comparing social welfare when the timing of decision making is different, we present the following results. When the degree of substitutability of goods is low, social welfare in the Stackelberg equilibrium is the largest when a partially privatized firm is the leader. By contrast, when the degree is high, the social welfare in the Bertrand equilibrium is the largest. Unlike the results presented in quantity competition, the Stackelberg equilibrium when a partially privatized firm is the follower never achieves the largest social welfare.

Suggested Citation

  • Kojun Hamada, 2021. "Mixed duopoly in price competition under the optimal privatization rate," Economics Bulletin, AccessEcon, vol. 41(3), pages 1282-1291.
    • Handle: RePEc:ebl:ecbull:eb-21-00828
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2021/Volume41/EB-21-V41-I3-P108.pdf
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    References listed on IDEAS

    as
    1. 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.
    2. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    3. Kojun Hamada, 2020. "Mixed duopoly in quantity competition under the optimal privatization rate," Economics Bulletin, AccessEcon, vol. 40(1), pages 689-698.
    4. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    5. José Naya, 2015. "Endogenous timing in a mixed duopoly model," Journal of Economics, Springer, vol. 116(2), pages 165-174, October.
    6. Juan Bárcena-Ruiz, 2007. "Endogenous Timing in a Mixed Duopoly: Price Competition," Journal of Economics, Springer, vol. 91(3), pages 263-272, July.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    mixed duopoly; partial privatization; price competition; Stackelberg equilibrium;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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