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Endogenous strategic variable in a mixed duopoly

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  • Amarjyoti Mahanta

    (Indian Institute of Technology, Guwahati)

Abstract

In this paper we endogenize the choice of strategic variables in a mixed duopoly market in which each firm produces a homogeneous product with a strictly increasing convex cost function. This allows us to endogenously determine the type of competition in a mixed duopoly. We get the interesting result that price competition is a dominant strategy for each firm in a mixed duopoly. The firms randomize among the prices belonging to the equilibrium range of price in Bertrand competition. It is different from the outcome in a simple duopoly market where both price competition and quantity competition are pure strategy Nash equilibrium. Thus, this paper establishes that the presence of a public firm influences the kind of competition that takes place in a duopoly market.

Suggested Citation

  • Amarjyoti Mahanta, 2019. "Endogenous strategic variable in a mixed duopoly," Journal of Economics, Springer, vol. 128(1), pages 47-65, September.
    • Handle: RePEc:kap:jeczfn:v:128:y:2019:i:1:d:10.1007_s00712-018-0641-1
    DOI: 10.1007/s00712-018-0641-1
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    References listed on IDEAS

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    Cited by:

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    2. José Méndez‐Naya & José A. Novo‐Peteiro, 2023. "Partial privatization with endogenous choice of strategic variable," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1215-1227, March.
    3. Junichi Haraguchi & Toshihiro Matsumura, 2021. "Profit‐enhancing entries in mixed oligopolies," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 33-55, July.

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    More about this item

    Keywords

    Mixed duopoly; Endogenous competition; Bertrand competition; Cournot competition;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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