IDEAS home Printed from https://ideas.repec.org/p/mlb/wpaper/626.html
   My bibliography  Save this paper

Excess Capacity Investment: Government versus Private Firms

Author

Listed:
  • Sasaki, D.
  • Wen, M.

Abstract

A supergame between public and private firms in an oligopolist industry is studied in this paper. We discover that there is a repeated-game equilibrium where the public firm produces less than its one-shot Nash equilibrium quantity, nevertheless the total supply and hence the social welfare are higher than in the one-shot Nash equilibrium. In such an equilibrium, the public firm, who is a social welfare maximiser, contracts its production below its full capacity in order to encourage the private firm's expansion.

Suggested Citation

  • Sasaki, D. & Wen, M., 1998. "Excess Capacity Investment: Government versus Private Firms," Department of Economics - Working Papers Series 626, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:626
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    INVESTMENTS ; GOVERNMENT ; PUBLIC ENTERPRISES;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:626. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dandapani Lokanathan (email available below). General contact details of provider: https://edirc.repec.org/data/demelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.