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A timing game in a mixed duopoly

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  • Chia-Hung Sun

    (Soochow University)

Abstract

This paper investigates a timing game in a mixed duopoly, whereby a relatively inefficient state-owned firm maximizing the linear combination of its profit and social welfare competes against a relatively efficient, profit-maximizing private firm over the timing of entry. We find that the incentives for firms to enter the market depend on the degrees of privatization of a state-owned firm and of the cost asymmetry between the two firms. We also provide welfare analysis by comparing the equilibrium timing of entry with the socially optimal one. When the two firms’ products are perfect substitutes, the socially optimal timing of both firms entering the market can be achieved if the state-owned firm is fully public.

Suggested Citation

  • Chia-Hung Sun, 2024. "A timing game in a mixed duopoly," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 15(1), pages 127-144, March.
    • Handle: RePEc:spr:series:v:15:y:2024:i:1:d:10.1007_s13209-023-00285-z
    DOI: 10.1007/s13209-023-00285-z
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    More about this item

    Keywords

    Mixed duopoly; Timing game; Precommitment game; Privatization policy;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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