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The Relative-Profit-Maximization Objective Of Private Firms And Endogenous Timing In A Mixed Oligopoly

Author

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  • YUANZHU LU

    (China Economics and Management Academy, Central University of Finance and Economics, No.39 South College Road, Beijing, China, 100081, China;
    Institute for Advanced Study, Shenzhen University, No. 3688 Nanhai Ave, Shenzhen, Guangdong, China, 518060, China)

Abstract

This paper investigates whether the relative-profit-maximization objective of private firms affects endogenous timing in a mixed oligopoly in the linear demand case. Assuming firms have constant marginal costs and symmetric private firms are more efficient than the public firm, it is found that such an objective does not affect endogenous timing compared with the absolute-profit-maximization case. When the equilibrium involves the public firm acting as a leader, social welfare increases compared with the level in the absolute-profit-maximization case. When the equilibrium involves the public firm acting as a follower, social welfare remains unchanged.

Suggested Citation

  • Yuanzhu Lu, 2011. "The Relative-Profit-Maximization Objective Of Private Firms And Endogenous Timing In A Mixed Oligopoly," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 56(02), pages 203-213.
    • Handle: RePEc:wsi:serxxx:v:56:y:2011:i:02:n:s0217590811004201
    DOI: 10.1142/S0217590811004201
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    Citations

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    Cited by:

    1. Satoh, Atsuhiro & Tanaka, Yasuhito, 2015. "Relative profit maximization and the choice of strategic variables in duopoly," MPRA Paper 63000, University Library of Munich, Germany.
    2. Satoh, Atsuhiro & Tanaka, Yasuhito, 2014. "Relative profit maximization and Bertrand equilibrium with convex cost functions," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 8, pages 1-15.
    3. Atsuhiro Satoh & Yasuhito Tanaka, 2014. "Relative Profit Maximization in Duopoly: Difference or Ratio," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 13(2), pages 127-141, December.
    4. Satoh, Atsuhiro & Tanaka, Yasuhito, 2014. "Choice of strategic variables under relative profit maximization in asymmetric oligopoly," MPRA Paper 55886, University Library of Munich, Germany.
    5. Atsuhiro Satoh & Yasuhito Tanaka, 2013. "Relative profit maximization and Bertrand equilibrium with quadratic cost functions," Economics and Business Letters, Oviedo University Press, vol. 2(3), pages 134-139.
    6. Masahiko HATTORI & Yasuhito TANAKA, 2016. "Subsidy for New Technology Adoption in Duopoly with Differentiated Goods under Absolute and Relative Profit Maximization," Journal of Economics Library, KSP Journals, vol. 3(3), pages 411-428, September.
    7. Satoh, Atsuhiro & Tanaka, Yasuhito, 2014. "Relative profit maximization in asymmetric oligopoly: Cournot and Bertrand equilibria," MPRA Paper 55883, University Library of Munich, Germany.
    8. Atsuhiro Satoh & Yasuhito Tanaka, 2014. "Free Entry Oligopoly, Cournot, Bertrand and Relative Profit Maximization," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 13(2), pages 143-155, December.
    9. Satoh, Atsuhiro & Tanaka, Yasuhito, 2016. "Choice of Strategic Variables by Relative Profit Maximizing Firms in Oligopoly," Economic Review, Hitotsubashi University, vol. 67(1), pages 17-25, January.
    10. Atsuhiro Satoh & Yasuhito Tanaka, 2014. "Relative profit maximization in asymmetric oligopoly," Economics Bulletin, AccessEcon, vol. 34(3), pages 1653-1664.
    11. Atsuhiro Satoh & Yasuhito Tanaka, 2014. "Choice of strategic variables under relative profit maximization in asymmetric oligopoly: non-equivalence of price strategy and quantity strategy," Economics and Business Letters, Oviedo University Press, vol. 3(2), pages 115-126.
    12. Tanaka, Yasuhito, 2014. "Relative profit maximization and irrelevance of leadership in Stackelberg model," MPRA Paper 55887, University Library of Munich, Germany.
    13. Li, Hui & Zhou, Wei & Elsadany, A. A & Chu, Tong, 2021. "Stability, multi-stability and instability in Cournot duopoly game with knowledge spillover effects and relative profit maximization," Chaos, Solitons & Fractals, Elsevier, vol. 146(C).
    14. Atsuhiro Satoh & Yasuhito Tanaka, 2014. "Irrelevance of Conjectural Variations in Duopoly under Relative Profit Maximization and Consistent Conjectures," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 10(2), pages 101-115, July.
    15. Satoh, Atsuhiro & Tanaka, Yasuhito, 2014. "Relative profit maximization and equivalence of Cournot and Bertrand equilibria in an asymmetric differentiated duopoly," MPRA Paper 55895, University Library of Munich, Germany.
    16. Matsumura, Toshihiro & Matsushima, Noriaki & Cato, Susumu, 2013. "Competitiveness and R&D competition revisited," Economic Modelling, Elsevier, vol. 31(C), pages 541-547.

    More about this item

    Keywords

    Mixed oligopoly; endogenous timing; Stackelberg; relative profits; L13; D43; H42;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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