Capacity choice in a mixed duopoly with a foreign competitor
AbstractThis paper analyzes a mixed duopoly in which a public firm and a (possibly partially) foreign-owned firm choose their capacity scales before competing in quantities. We show that the private firm chooses over-capacity, as in previous literature, except if it is completely foreign-owned. In this polar case, the private firm chooses the cost-minimizing capacity scale. We also show that the change in the nationality of the private firm does not essentially alter the public firm's choice, since this firm chooses under-capacity if products are substitutes and over-capacity if they are complements, just as it does when it faces a domestic competitor.
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Bibliographic InfoArticle provided by AccessEcon in its journal Economics Bulletin.
Volume (Year): 32 (2012)
Issue (Month): 3 ()
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Mixed Oligopoly; Capacity Choice; Foreign Firm; Public Firm;
Find related papers by JEL classification:
- L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
- L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
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"Mixed oligopoly and the choice of capacity,"
CEMA Working Papers
495, China Economics and Management Academy, Central University of Finance and Economics.
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- Dave Furth & Dan Kovenock, 1993.
"Price leadership in a duopoly with capacity constraints and product differentiation,"
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Springer, vol. 57(1), pages 1-35, February.
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- Wang, Leonard F.S. & Chen, Tai-Liang, 2011. "Mixed oligopoly, optimal privatization, and foreign penetration," Economic Modelling, Elsevier, vol. 28(4), pages 1465-1470, July.
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