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Optimal Manipulation Rules in a Mixed Duopoly

Author

Listed:
  • Corrado Benassi

    (Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna; The Rimini Centre for Economic Analysis (RCEA))

  • Alessandra Chirco

    (Dipartimento di Scienze Economiche e Matematico-Statistiche, Università del Salento)

  • Marcella Scrimitore

    (Dipartimento di Scienze Economiche e Matematico-Statistiche, Università del Salento; The Rimini Centre for Economic Analysis (RCEA))

Abstract

We study the optimal manipulation rules of a public firm's objective function in a mixed duopoly with imperfect product substitutability. We compare the solutions under quantity and price competition, and the way in which they are affected by the degree of product substitutability. This allows us to show that partial privatization, strategic delegation and other specific government's commitments on the objective function of the public management can be looked at as special cases of these optimal rules, and to evaluate the viability of these policies under the two modes of competition. In this framework, we also discuss the equivalence between manipulation of the objective function and Stackelberg leadership.

Suggested Citation

  • Corrado Benassi & Alessandra Chirco & Marcella Scrimitore, 2011. "Optimal Manipulation Rules in a Mixed Duopoly," Working Paper series 43_11, Rimini Centre for Economic Analysis.
    • Handle: RePEc:rim:rimwps:43_11
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    File URL: http://www.rcea.org/RePEc/pdf/wp43_11.pdf
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    References listed on IDEAS

    as
    1. Arghya Ghosh & Manipushpak Mitra, 2008. "Comparing Bertrand and Cournot Outcomes in the Presence of Public Firms," Discussion Papers 2008-18, School of Economics, The University of New South Wales.
    2. Toshihiro Matsumura, 2003. "Endogenous Role in Mixed Markets: A Two‐Production‐Period Model," Southern Economic Journal, John Wiley & Sons, vol. 70(2), pages 403-413, October.
    3. Kazuhiro Ohnishi, 2010. "Partial privatization in price-setting mixed duopoly," Economics Bulletin, AccessEcon, vol. 30(1), pages 309-314.
    4. Fumas, Vicente Salas, 1992. "Relative performance evaluation of management : The effects on industrial competition and risk sharing," International Journal of Industrial Organization, Elsevier, vol. 10(3), pages 473-489, September.
    5. Barros, Fatima, 1995. "Incentive schemes as strategic variables: An application to a mixed duopoly," International Journal of Industrial Organization, Elsevier, vol. 13(3), pages 373-386, September.
    6. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-147, Supplemen.
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    8. Toshihiro Matsumura, 2003. "Endogenous Role in Mixed Markets: A Two-Production-Period Model," Southern Economic Journal, John Wiley & Sons, vol. 70(2), pages 403-413, October.
    9. repec:ebl:ecbull:v:30:y:2010:i:1:p:309-314 is not listed on IDEAS
    10. Miller, Nolan H & Pazgal, Amit I, 2001. "The Equivalence of Price and Quantity Competition with Delegation," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 284-301, Summer.
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    13. Basu, Kaushik, 1995. "Stackelberg equilibrium in oligopoly: An explanation based on managerial incentives," Economics Letters, Elsevier, vol. 49(4), pages 459-464, October.
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    Citations

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    Cited by:

    1. Alessandra Chirco & Caterina Colombo & Marcella Scrimitore, 2013. "Organizational Structure and the Choice of Price vs. Quantity in a Mixed Duopoly," Working Paper series 27_13, Rimini Centre for Economic Analysis.
    2. Ritika Jain & Rupayan Pal, 2012. "Mixed duopoly, cross-ownership and partial privatization," Journal of Economics, Springer, vol. 107(1), pages 45-70, September.
    3. Scrimitore, Marcella, 2011. "Profitability in Cournot and Bertrand Mixed Markets under Endogenous Objectives," MPRA Paper 35643, University Library of Munich, Germany.

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    More about this item

    Keywords

    Mixed oligopoly; strategic manipulation; partial privatization;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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