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Mixed Duopoly under Vertical Differenciation

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  • Isabel Grilo

Abstract

In this paper we study a vertically differentiated duopoly market with a profit maximizing firm (private firm) and a total surplus maximizing firm (public firm). The technological conditions are assumed identical for both firms and are described by unit costs which are constant with respect to quantity, though increasing in quality. No specific form is given to the relation between unit costs and quality. We prove that the socially optimal solution can be sustained as a market outcome by using a public firm as a market agent. We also provide conditions on the constant unit cost function under which every market outcome is a social optimum.

Suggested Citation

  • Isabel Grilo, 1994. "Mixed Duopoly under Vertical Differenciation," Annals of Economics and Statistics, GENES, issue 33, pages 91-112.
    • Handle: RePEc:adr:anecst:y:1994:i:33:p:91-112
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    Cited by:

    1. Arzi Adbi & Ajay Bhaskarabhatla & Chirantan Chatterjee, 2020. "Stakeholder Orientation and Market Impact: Evidence from India," Journal of Business Ethics, Springer, vol. 161(2), pages 479-496, January.
    2. Benassi, Corrado & Castellani, Massimiliano & Mussoni, Maurizio, 2016. "Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 86-96.
    3. Pedro Pita Barros & Xavier Martinez‐Giralt, 2002. "Public and Private Provision of Health Care," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 11(1), pages 109-133, March.
    4. Del Rey Elena & Estevan Fernanda, 2020. "Assessing Higher Education Policy in Brazil: A Mixed Oligopoly Approach," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(1), pages 1-16, January.
    5. Philippe De Donder, 2005. "L'entreprise publique en concurrence : les oligopoles mixtes," Revue Française d'Économie, Programme National Persée, vol. 20(2), pages 11-50.
    6. Stefano Quarta & Skerdilajda Zanaj, 2018. "Health and Pollution in a Vertically Differentiated Duopoly," DEM Discussion Paper Series 18-20, Department of Economics at the University of Luxembourg.
    7. Laine, Liisa T. & Ma, Ching-to Albert, 2017. "Quality and competition between public and private firms," Journal of Economic Behavior & Organization, Elsevier, vol. 140(C), pages 336-353.
    8. Rim Lahmandi-Ayed & Hejer Lasram & Didier Laussel, 2020. "Is partial privatization of universities a solution for higher education? A successive monopolies model," Working Papers hal-02988323, HAL.
    9. De Donder, Philippe & Roemer, John E., 2009. "Mixed oligopoly equilibria when firms' objectives are endogenous," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 414-423, May.
    10. Chatterjee, Susmita & Chattopadhyay, Srobonti & Chatterjee, Rittwik & Dutta, Debabrata, 2017. "Public Firm in Mixed Oligopolistic Structure: A Theoretical Exposition," MPRA Paper 80073, University Library of Munich, Germany, revised 15 May 2017.
    11. Chatterjee, Susmita & Datta, Debabrata & Banerjee, Ranjan, 2016. "Performance of mixed oligopoly model in the context of Indian telecom industry," MPRA Paper 72949, University Library of Munich, Germany.
    12. Rim Lahmandi‐Ayed & Hejer Lasram & Didier Laussel, 2021. "Is partial privatization of universities a solution for higher education?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1174-1198, December.
    13. Ziad Ghandour & Odd Rune Straume, 2022. "Optimal funding coverage in a mixed oligopoly with quality competition and price regulation," Journal of Economics, Springer, vol. 136(3), pages 201-225, August.
    14. Jie Shuai, 2017. "A comment on mixed oligopoly spatial model: the non-uniform consumer distribution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 57-63, April.

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