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A public firm in a vertically linked price discriminating spatial duopoly

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  • Beladi, Hamid
  • Chakrabarti, Avik
  • Hollas, Daniel

Abstract

We show that, in a vertically linked duopoly where neither firm can produce all varieties demanded, spatial competition between a public and a private firm induces them to deviate from the socially optimal location. We identify specific conditions under which a change in the degree of privatization induces one firm to move toward, while the other moves away from the socially optimal location. There exists a critical level of privatization above (below) which the public and private firms will come close (drift apart) with a rise in the degree of privatization.

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  • Beladi, Hamid & Chakrabarti, Avik & Hollas, Daniel, 2016. "A public firm in a vertically linked price discriminating spatial duopoly," Economic Systems, Elsevier, vol. 40(1), pages 59-63.
    • Handle: RePEc:eee:ecosys:v:40:y:2016:i:1:p:59-63
    DOI: 10.1016/j.ecosys.2015.09.003
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    Cited by:

    1. Eleftheriou, Konstantinos & Michelacakis, Nickolas, 2017. "Spatial Price Discrimination and Privatization on Vertically Related Markets," MPRA Paper 76964, University Library of Munich, Germany.

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    More about this item

    Keywords

    Product differentiation; Spatial competition; Public firm; Price discrimination; Firm location;
    All these keywords.

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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